SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
Of The Securities Exchange Act Of 1934
For the Fiscal Year Ended: December 31, 1995
Commission file number: 0-17467
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
(Name of Small Business Issuer in its Charter)
State of Minnesota 41-1603719
(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No
Check if disclosure of delinquent filers in response to Rule 405
of Regulation S-B is not contained in this Form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Issuer's revenues for year ended December 31, 1995 were
$2,215,115
As of February 29, 1996, there were 23,086.79 Units of limited
partnership interest in the registrant outstanding and owned by
nonaffiliates of the registrant, which Units had an aggregate
market value (based solely on the price at which they were sold
since there is no ready market for such Units) of $23,086,790.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant has not incorporated any documents by reference
into this report.
Transitional Small Business Disclosure Format:
Yes No [X]
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
AEI Real Estate Fund XVII Limited Partnership (the
"Partnership" or the "Registrant") is a limited partnership which
was organized pursuant to the laws of the State of Minnesota on
February 2, 1988. The registrant is comprised of AEI Fund
Management XVII, Inc. (AFM) as Managing General Partner, Robert
P. Johnson as the Individual General Partner, and purchasers of
partnership units as Limited Partners. The Partnership offered
for sale up to $30,000,000 of limited partnership interests (the
"Units") (30,000 Units at $1,000 per Unit) pursuant to a
registration statement effective November 2, 1987. The
Partnership commenced operations on February 10, 1988 when
minimum subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated November 1, 1988 when the one-year offering period
expired. The Partnership received subscriptions for 23,388.7
Limited Partnership Units ($23,388,700).
The Partnership was organized to acquire, initially on a
debt-free basis, existing and newly constructed commercial
properties located in the United States, to lease such properties
to tenants under triple net leases, to hold such properties and
to eventually sell such properties. From subscription proceeds,
the Partnership purchased twenty properties, including partial
interests in eight properties, totaling $20,026,239. The balance
of the subscription proceeds was applied to organization and
syndication costs, working capital reserves and distributions,
which represented a return of capital. The properties are all
commercial, single tenant buildings leased under triple net
leases.
The Partnership will hold its properties until the General
Partners determine that the sale or other disposition of the
properties is advantageous in view of the Partnership's
investment objectives. In deciding whether to sell properties,
the General Partners will consider factors such as potential
appreciation, net cash flow and income tax considerations. In
addition, certain lessees have been granted options to purchase
properties after a specified portion of the lease term has
elapsed. It is anticipated that the Partnership will sell its
properties within twelve years after acquisition. At any time
prior to selling the properties, the Partnership may mortgage one
or more of its properties in amounts not exceeding 50% of the
fair market value of the property.
Leases
Although there are variations in the specific terms of the
leases, the following is a summary of the general terms of the
Partnership's leases. The properties are leased to various
tenants under noncancelable triple net leases, which are
classified as operating leases. Under a triple net lease, the
lessee is responsible for all real estate taxes, insurance,
maintenance, repairs and operating expenses for the property.
The initial lease terms are for 15 to 20 years. The leases
provide for base annual rental payments, payable in monthly
installments, and contain rent clauses which entitle the
Partnership to receive additional rent in future years based on
stated rent increases or if gross receipts for the property
exceed certain specified amounts, among other conditions.
Most of the leases provide the lessee with two five-year
renewal options subject to the same terms and conditions as the
initial lease. Certain lessees have been granted options to
purchase the property. Depending on the lease, the purchase
price is either determined by a formula, or is the greater of the
fair market value of the property or the amount determined by a
formula. In all cases, if the option were to be exercised by the
lessee, the purchase price would be greater than the original
cost of the property.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
On April 22, 1993, the Partnership sold a 13.4893%
interest in the Applebee's restaurant in Virginia Beach, Virginia
to an unrelated third party. The Partnership received net sale
proceeds of $235,488 which resulted in a net gain of $83,739.
The Partnership owned the Virginia Beach property as tenants-in-
common with the unrelated third party. The management of the
property was governed by a co-tenancy agreement between the
Partnership and the unrelated third party, which granted the
Partnership the authority to control the management of the
property.
In September, 1995, the lessee exercised an option in the
Lease Agreement to purchase the property. On November 8, 1995,
the sale closed with the parties receiving net sale proceeds of
$1,741,224, which resulted in a net gain of $679,964. At the
time of sale, the cost and related accumulated depreciation was
$1,279,192 and $217,932, respectively. The Partnership's share of
the net sale proceeds and net gain was $1,496,613 and $596,181,
respectively.
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
$715,545 which resulted in a net gain of $307,167. At the time
of sale, the cost and related accumulated depreciation of the
property was $534,974 and $126,596, respectively.
In July 1995, the lessee of the Applebee's restaurant in
Hampton, Virginia, exercised an option in the Lease Agreement to
purchase the property. On August 31, 1995, the sale closed with
the Partnership receiving net sale proceeds of $1,747,127 which
resulted in a net gain of $661,866. At the time of sale, the
cost and related accumulated depreciation of the property was
$1,287,072 and $201,811, 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 $322,442, which resulted in a net gain of
$78,244 for the Jiffy Lube in Garland, Texas. At the time of
sale, the cost and related accumulated depreciation was $303,108
and $58,910, respectively. The Partnership recognized net sale
proceeds of $483,653, which resulted in a net gain of $112,985
for one of the Jiffy Lube's in Dallas, Texas. At the time of
sale, the cost and related accumulated depreciation was $454,300
and $83,632, respectively.
In September, 1995, the lessee of the Applebee's
restaurant in Richmond, Virginia exercised an option in the Lease
Agreement to purchase the property. On October 30, 1995, the
sale closed with the Partnership receiving net sale proceeds of
$1,905,438, which resulted in a net gain of $746,293. At the
time of sale, the cost and related accumulated depreciation was
$1,375,732 and $216,587, 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 demolition of the building and payment to
the Partnership of approximately $428,000 for the building and
equipment and approximately $50,000 for lost rent. The property
will not be rebuilt and the Partnership will list the land for
sale. The Partnership's cost and related accumulated
depreciation in the building and equipment at December 31, 1995
was $512,433 and $182,863, respectively. The settlement would
result in a net gain of approximately $98,430. The Partnership's
cost of the land is $261,644.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
The Managing General Partner is in the process of
preparing a proxy statement to propose an amendment to the
Limited Partnership Agreement that would allow the Partnership to
reinvest the majority of the sales proceeds in additional
properties. If the amendment is approved, a property the
Partnership may purchase is a Tractor Supply Company Store in
Tupelo, Mississippi. The purchase price will be approximately
$1,300,000. The property will be leased to Tractor Supply
Company under a Lease Agreement with a primary term of 14 years
and annual rental payments of approximately $139,750.
The Partnership owns a 65% interest in the J.T. McCord's
property in Mesquite, Texas. In December, 1995, the Partnership
took possession of the property after the lessee was unable to
perform under the terms of the Lease. The property is currently
listed 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 property.
The Partnership owns a 65.09% interest in the Sizzler
restaurant at the King's Island Theme Park near Cincinnati, Ohio
and a 100% interest in a Sizzler restaurant on Fields Ertel Road
in Cincinnati, Ohio. In November, 1993, after reviewing the
lessee's operating results, the Partnership determined that the
lessee would be unable to operate the restaurant in a manner
capable of maximizing the restaurants' sales. Consequently, at
the direction of the Partnership, a multi-unit restaurant
operator assumed operation of the restaurants while the
Partnership reviewed the available options.
In January, 1994, the Partnership closed the restaurant at
King's Island 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 property. The Partnership agreed to indemnify the
operator against operating deficits while it reviewed the
available options.
On July 15, 1994, the Partnership re-leased the Sizzler on
Fields Ertel Road to Fields Ertel Foods, Inc. (FEF). FEF was not
able to profitably operate the restaurant and closed the
restaurant.
The Partnership has reached a verbal agreement to re-lease
the property on Fields Ertel Road to FFT Cincinnati Ltd. The
lease is expected to be signed in March, 1996.
Major Tenants
During 1995, four of the Partnership's lessees each
contributed more than ten percent of the Partnership's total
rental revenue. The major tenants in aggregate contributed 75%
of the Partnership's total rental revenue in 1995. It is
anticipated that, based on the minimum rental payments required
under the leases, each major tenant will continue to contribute
more than ten percent of the Partnership's total rental revenue
in 1996 and future years. The only exception is the tenant in
the Applebee's properties will not continue to be major tenant
since the properties were sold in 1995. Any failure of these
major tenants could materially affect the Partnership's net
income and cash distributions.
Competition
The Partnership is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Partnership. At the time the Partnership
elects to dispose of its properties, the Partnership will be in
competition with other persons and entities to find buyers for
its properties.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Employees
The Partnership has no direct employees. Management
services are performed for the Partnership by AEI Fund
Management, Inc., an affiliate of AFM.
ITEM 2. DESCRIPTION OF PROPERTIES.
Investment Objectives
The Partnership's investment objectives were to acquire
existing or newly-developed commercial properties throughout the
United States that offer the potential for (i) preservation and
protection of the Partnership's capital; (ii) partially tax-
deferred cash distributions from operations which may increase
through rent participation clauses or mandated rent increases;
and (iii) long-term capital gains through appreciation in value
of the Partnership's properties realized upon sale. The
Partnership does not have a policy, and there is no limitation,
as to the amount or percentage of assets that may be invested in
any one property. However, to the extent possible, the General
Partners attempt to diversify the type and location of the
Partnership's properties.
Description of Properties
The Partnership's properties are all commercial, single
tenant buildings. All the properties were acquired on a debt-
free basis and are leased to various tenants under noncancelable
triple net leases, which are classified as operating leases. The
Partnership holds an undivided fee simple interest in the
properties. At any time prior to selling the properties, the
Partnership may mortgage one or more of its properties in amounts
not exceeding 50% of the fair market value of the property.
The Partnership's properties are subject to the general
competitive conditions incident to the ownership of single tenant
investment real estate. Since each property is leased under a
long-term lease, there is little competition until the
Partnership decides to sell the property. At this time, the
Partnership will be competing with other real estate owners, on
both a national and local level, in attempting to find buyers for
the properties. In the event of a tenant default, the
Partnership would be competing with other real estate owners, who
have property vacancies, to attract a new tenant to lease the
property. The Partnership's tenants operate in industries that
are very competitive and can be affected by factors such as
changes in regional or local economies, seasonality and changes
in consumer preference.
The following table is a summary of the properties that
the Partnership acquired and owned as of December 31, 1995.
Total Property
Purchase Acquisition Annual Lease
Property Date Costs Lessee Payment
J. T. McCord's Restaurant
Mesquite, TX
(65%) 2/12/88 $ 956,343 (F1)
Cheddar's Restaurant Phaedra
Indianapolis, IN Partners III,
(50%) 2/16/88 $ 774,077 Ltd. $ 99,375
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
Total Property
Purchase Acquisition Annual Lease
Property Date Costs Lessee Payment
Jiffy Lube Auto Care Center Jiffy Lube
Dallas, TX International
(75%) 3/1/88 $ 454,624 of Maryland,Inc. $ 56,925
am/pm Convenience Store B. Wells O'Brien
Carson City, NV 11/9/88 $ 703,871 & Co. $ 103,263
Taco Cabana Restaurant Texas Taco
San Marcos, TX 11/15/88 $1,013,505 Cabana, L.P. $ 151,352
Danny's Family Car Wash Apache Car
Phoenix, AZ 2/9/89 $1,688,271 Wash, Inc. $ 227,757
Huntington
Denny's Restaurant Restaurants
Casa Grande, AZ 3/1/89 $ 721,420 Group, Inc. $ 96,856
Children's World Children's World
Daycare Center Learning
St. Louis, MO 9/29/89 $ 950,627 Centers, Inc. $ 111,016
Children's World Children's World
Daycare Center Learning
Merrimack, NH 9/29/89 $1,159,242 Centers, Inc. $ 135,914
Children's World Children's World
Daycare Center Learning
Chino, CA 9/29/89 $1,305,518 Centers, Inc.$ 153,136
Children's World Children's World
Daycare Center Learning
Palatine, IL 9/29/89 $ 801,098 Centers, Inc. $ 93,349
Sizzler Restaurant
Cincinnati, OH
(65.09%) 1/30/90 $1,048,666 (F1)
Sizzler Restaurant
Cincinnati, OH 3/7/90 $1,898,768 (F1)
Heartland
Cheddar's Restaurant Restaurant
Davenport, IA 11/4/91 $1,530,934 Corporation $ 217,117
(F1) The property is vacant and listed for sale or lease.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
The properties listed above with a partial ownership
percentage are owned with affiliates of the Partnership. AEI
Real Estate Fund XVI Limited Partnership owns the remaining
interest in the Jiffy Lube, the J.T. McCord's restaurant and the
Cheddar's restaurant. AEI Real Estate Funds XVI and XVIII
Limited Partnerships own the remaining interest in the Sizzler
restaurant in Cincinnati, Ohio.
Each Partnership owns a separate, undivided interest in
the properties. No specific agreement or commitment exists
between the Partnerships as to the management of their respective
interests in the properties, and the Partnership that holds more
than a 50% interest does not control decisions over the other
Partnership's interest.
The initial Lease terms are for 20 years except for the
Taco Cabana restaurant and the Children's World daycare centers,
which have Lease terms of 15 years. Most of the Leases have
renewal options which may extend the Lease term an additional 10
years.
Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The General Partners believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.
For tax purposes, the Partnership's properties are
depreciated under the Modified Accelerated Cost Recovery System
(MACRS). The largest depreciable component of a property is the
building which is depreciated, using the straight-line method,
over 31.5 years. The remaining depreciable components of a
property are personal property and land improvements which are
depreciated, using an accelerated method, over 5 and 15 years,
respectively. Since the Partnership has tax-exempt Partners, the
Partnership is subject to the rules of Section 168(h)(6) of the
Internal Revenue Code which requires a percentage of the
properties' depreciable components to be depreciated over longer
lives using the straight-line method. In general the federal tax
basis of the properties for tax depreciation purposes is the same
as the basis for book depreciation purposes.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS.
As of December 31, 1995, there were 2,055 holders of
record of the registrant's Limited Partnership Units. There is
no other class of security outstanding or authorized. The
registrant's Units are not a traded security in any market.
However, the Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
outstanding at the beginning of the year and in no event,
obligated to purchase Units if such purchase would impair the
capital or operation of the Partnership.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS. (Continued)
During 1995, eleven Limited Partners redeemed a total of
55 Partnership Units for $35,807 in accordance with the
Partnership Agreement. In prior years, a total of twelve Limited
Partners redeemed 227 Partnership Units for $192,222. The
redemptions increase the remaining Limited Partners' ownership
interest in the Partnership.
Cash distributions of $19,738 and $20,581 were made to the
General Partners and $1,918,208 and $2,037,470 were made to the
Limited Partners in 1995 and 1994, respectively. The
distributions were made on a quarterly basis and represent Net
Cash Flow, as defined, except as discussed below. These
distributions should not be compared with dividends paid on
capital stock by corporations.
As part of the Limited Partner distributions discussed
above, the Partnership distributed proceeds from the property
sales of $920,747 and $23,385 in 1995 and 1994, respectively.
The distributions reduced the Limited Partners' Adjusted Capital
Contributions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
The Partnership's rental income is derived from long-term,
triple net lease agreements on the Partnership's properties. For
the years ended December 31, 1995 and 1994, the Partnership
recognized rental income of $2,086,765 and $2,192,044,
respectively. During the same periods, the Partnership earned
investment income of $91,758 and $7,841, respectively. In 1995,
rental income decreased $161,956 as a result of the property
sales discussed below. The decrease in rental income was
partially offset by rent increases of $38,920 on eight properties
and additional investment income earned on the net proceeds from
the property sales.
In March, 1995, the Partnership received $36,592 of
insurance proceeds for vandalism to the Kings Island Sizzler
restaurant. Damage to the property was minor and the Partnership
has elected not to make repairs at this time. The insurance
proceeds are shown as Other Income on the Income Statement.
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. Flagship continued to
operate the property while attempting to develop a plan of
reorganization which would be acceptable to the bankruptcy court
and its creditors. In 1992, it became apparent that Flagship did
not have the financial resources to operate the property in
compliance with the Lease. 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. At that time, various claims between Flagship and the
Partnership were dismissed. On April 21, 1993, the Partnership's
assignee, WIM, Inc. (WIM), took over management of the
restaurants.
ITEM 6. 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. However, WIM
was not able to operate the properties profitably and was unable
to make rental payments as provided in the Lease Agreements. The
Partnership's share of renovation and operating expenses during
this period was $222,976. To reduce expenses and minimize the
losses produced by this property, the Partnership amended the
agreement 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
property after WIM was unable to perform under the terms of the
Lease. The property is currently listed 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 property.
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 is $23,833.
In 1994, the Partnership expensed $103,595 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 $73,667 was
completed in the fourth quarter of 1995.
The Partnership owns a 65.09% interest in the Sizzler
restaurant at the King's Island Theme Park near Cincinnati, Ohio
and a 100% interest in a Sizzler restaurant on Fields Ertel Road
in Cincinnati, Ohio. In November, 1992, after reviewing the
operating results of the lessee, the Partnership agreed to amend
the Lease Agreements of the Sizzler restaurants. As of November,
1993, the lessee was in default under the amended Lease
Agreements. After reviewing the lessee's operating results, the
Partnership determined that the lessee would be unable to operate
the restaurant in a manner capable of maximizing the restaurants'
sales. Consequently, at the direction of the Partnership, a
multi-unit restaurant operator assumed operation of the
restaurants while the Partnership reviewed the available options.
In January, 1994, the Partnership closed the restaurant at
King's Island 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 property. The Partnership agreed to indemnify the
operator against operating deficits while it reviewed the
available options. As a result of the indemnification, the
Partnership recognized additional Partnership administration and
property management expenses of $75,023 in 1994.
On July 15, 1994, the Partnership re-leased the Sizzler on
Fields Ertel Road to Fields Ertel Foods, Inc. (FEF) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. FEF was not able to
profitably operate the restaurant and closed the restaurant. The
total amount of rent not collected in 1995 and 1994 was $382,367
and $372,200, respectively, for the two properties. These
amounts were not accrued for financial reporting purposes.
The Partnership has reached a verbal agreement to re-lease
the property on Fields Ertel Road to FFT Cincinnati Ltd. under a
triple net lease agreement with a primary term of 20 years which
may be renewed for up to four consecutive five-year periods. The
annual base rent is $19,750 for the first lease year and $75,000
for the second lease year, with rent increases each subsequent
lease year of two percent of the prior year's rent. The
Partnership may also receive percentage rent if sales exceed
certain amounts.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
During the years ended December 31, 1995 and 1994, the
Partnership paid Partnership administration expenses to
affiliated parties of $302,383 and $305,302, 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 $128,323 and $511,571, 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 1995, when compared to 1994, is the result
of expenses incurred in 1994 related to the J.T. McCord's and
Sizzler situations discussed above.
As of December 31, 1995, 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 1995, the Partnership's cash balances increased
$6,361,151 due to the sale of six of the Partnership's
properties. Net cash provided by operating activities increased
from $1,481,451 in 1994 to $1,657,742 in 1995. In 1995, net cash
income before depreciation, when compared to 1994, increased by
approximately $393,000. In 1994, net cash income before
depreciation was depressed mainly due to property management
expenses incurred related to the J.T. McCord's and Sizzler
situations discussed above. The increase in net cash income
before depreciation was partially offset by net timing
differences in the collection of payments from the lessees and
the payment of expenses by the Partnership.
Net cash provided by investing activities was
$6,608,318, which represents the net cash proceeds from the sale
of six of the Partnership's properties. 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 $715,545 which resulted in a net
gain of $307,167. At the time of sale, the cost and related
accumulated depreciation of the property was $534,974 and
$126,596, respectively.
In July 1995, the lessee of the Applebee's restaurant in
Hampton, Virginia, exercised an option in the Lease Agreement to
purchase the property. On August 31, 1995, the sale closed with
the Partnership receiving net sale proceeds of $1,747,127 which
resulted in a net gain of $661,866. At the time of sale, the
cost and related accumulated depreciation of the property was
$1,287,072 and $201,811, respectively.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 $322,442, which resulted in a net gain of
$78,244 for the Jiffy Lube in Garland, Texas. At the time of
sale, the cost and related accumulated depreciation was $303,108
and $58,910, respectively. The Partnership recognized net sale
proceeds of $483,653, which resulted in a net gain of $112,985
for one of the Jiffy Lube's in Dallas, Texas. At the time of
sale, the cost and related accumulated depreciation was $454,300
and $83,632, respectively.
In September, 1995, the lessee of the Applebee's
restaurant in Richmond, Virginia exercised an option in the Lease
Agreement to purchase the property. On October 30, 1995, the
sale closed with the Partnership receiving net sale proceeds of
$1,905,438, which resulted in a net gain of $746,293. At the
time of sale, the cost and related accumulated depreciation was
$1,375,732 and $216,587, respectively. A portion of the net sale
proceeds was used to pay off the bank note and satisfy the
mortgage on the property as discussed below.
On April 22, 1993, the Partnership sold a 13.4893%
interest in the Applebee's restaurant in Virginia Beach, Virginia
to an unrelated third party. The Partnership owned the Virginia
Beach property as tenants-in-common with the unrelated third
party. The management of the property was governed by a co-
tenancy agreement between the Partnership and the unrelated third
party, which granted the Partnership the authority to control the
management of the property. The Partnership accounted for its
interest under the full consolidation method whereby the
unrelated third party's interest in the property is reflected in
the Partnership's financial statements as a minority interest.
In September, 1995, the lessee exercised an option in the
Lease Agreement to purchase the property. On November 8, 1995,
the sale closed with the parties receiving net sale proceeds of
$1,741,224, which resulted in a net gain of $679,964. At the time
of sale, the cost and related accumulated depreciation was
$1,279,192 and $217,932, respectively. The Partnership's share of
the net sale proceeds and net gain was $1,496,613 and $596,181,
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 demolition of the building and payment to
the Partnership of approximately $428,000 for the building and
equipment and approximately $50,000 for lost rent. The property
will not be rebuilt and the Partnership will list the land for
sale. The Partnership's cost and related accumulated
depreciation in the building and equipment at December 31, 1995
was $512,433 and $182,863, respectively. The settlement would
result in a net gain of approximately $98,430. The Partnership's
cost of the land is $261,644.
During 1995 and 1994, the Partnership distributed $930,047
and $23,621 of the net sale proceeds to the Limited and General
Partners, which represented a return of capital of $39.82 and
$1.01 per Limited Partnership Unit, respectively. The Managing
General Partner is in the process of preparing a proxy statement
to propose an amendment to the Limited Partnership Agreement that
would allow the Partnership to reinvest the majority of the sales
proceeds in additional properties.
If the amendment is approved, a property the Partnership
may purchase is a Tractor Supply Company Store in Tupelo,
Mississippi. The purchase price will be approximately
$1,300,000. The property will be leased to Tractor Supply
Company under a Lease Agreement with a primary term of 14 years
and annual rental payments of approximately $139,750.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 1994, the Partnership made distributions at a 9.0% rate
which resulted in distributions to the Partners of approximately
$2,058,000. Effective January 1, 1995, the distribution rate was
reduced to 7.0% which resulted in distributions to the Partners
of approximately $1,584,000. The reduction in distributions in
1995 was partially offset by a special distribution of net sale
proceeds of approximately $354,000 made in December, 1995.
The Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
outstanding at the beginning of the year and in no event,
obligated to purchase Units if such purchase would impair the
capital or operation of the Partnership.
During 1995, eleven Limited Partners redeemed a total of
55 Partnership Units for $35,807 in accordance with the
Partnership Agreement. The Partnership acquired these Units using
Net Cash Flow from operations. In prior years, a total of twelve
Limited Partners redeemed 227 Partnership Units for $192,222.
The redemptions increase the remaining Limited Partners'
ownership interest in the Partnership.
On January 31, 1994, the Partnership entered into a five-
year bank term Note for $195,000 with interest equal to the prime
rate plus one half percent. Proceeds from the Note were advanced
to WIM for renovation and other restaurant operating costs
related to the J.T. McCord's property. The Partnership provided
a mortgage and a Lease Assignment Agreement on its Applebee's
restaurant in Richmond, Virginia as collateral for the loan. On
October 30, 1995, the Partnership sold the property and a portion
of the net proceeds was used to pay off the outstanding principal
balance of the bank Note and satisfy the mortgage. In 1995 and
1994, interest expense on the Note was $12,460 and $12,884,
respectively.
In September, 1994, the Partnership established a $150,000
unsecured line of credit at Fidelity Bank of Edina, Minnesota.
On January 5, 1995, the line of credit was increased to $400,000.
The line of credit bears interest at the prime rate (8.5% on
December 31, 1995 and 1994) plus one percent on the outstanding
balance, which is due on demand, but in any event no later than
January 5, 1996. The line of credit was established to provide
short-term financing to cover any temporary cash deficits. As of
December 31, 1995 and 1994, no amount was due on the line of
credit. In 1995 and 1994, interest expense related to the line
of credit was $7,016 and $1,446, respectively.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 7. FINANCIAL STATEMENTS.
See accompanying index to financial statements.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet as of December 31, 1995 and 1994
Statements for the Years Ended December 31, 1995 and 1994:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Partners:
AEI Real Estate Fund XVII Limited Partnership
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI REAL
ESTATE FUND XVII LIMITED PARTNERSHIP (a Minnesota limited
partnership) as of December 31, 1995 and 1994 and the related
statements of income, cash flows and changes in partners' capital
for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of AEI Real Estate Fund XVII Limited Partnership as of December
31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended, in conformity with generally
accepted accounting principles.
Minneapolis, Minnesota Boulay, Heutmaker, Zibell & Co. P.L.L.P.
February 6, 1996 Certified Public Accountants
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1995 1994
CURRENT ASSETS:
Cash and Cash Equivalents $ 6,467,946 $ 106,795
Receivables 79,092 28,595
------------- -------------
Total Current Assets 6,547,038 135,390
------------- -------------
INVESTMENTS IN REAL ESTATE:
Land 4,852,325 6,960,667
Buildings and Equipment 10,154,639 13,280,675
Accumulated Depreciation (2,796,130) (3,165,560)
------------- -------------
Net Investments in Real Estate 12,210,834 17,075,782
------------- -------------
Total Assets $18,757,872 $17,211,172
============= =============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 53,187 $ 68,052
Distributions Payable 715,773 470,373
Security Deposit 37,307 37,307
Current Portion of Contract Payable 0 11,471
Current Portion of Long-Term Debt 0 32,235
------------- -------------
Total Current Liabilities 806,267 619,438
------------- -------------
CONTRACT PAYABLE - Net of Current Portion 0 65,917
LONG-TERM DEBT - Net of Current Portion 0 144,321
MINORITY INTEREST 0 164,800
PARTNERS' CAPITAL (DEFICIT):
General Partners (21,896) (39,245)
Limited Partners, $1,000 Unit value;
30,000 Units authorized; 23,389 Units issued;
23,107 and 23,162 outstanding in
1995 and 1994, respectively 17,973,501 16,255,941
------------- -------------
Total Partners' Capital 17,951,605 16,216,696
------------- -------------
Total Liabilities and Partners' Capital $18,757,872 $17,211,172
============= =============
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31
1995 1994
INCOME:
Rent $ 2,086,765 $ 2,192,044
Investment Income 91,758 7,841
Other Income 36,592 0
------------ ------------
Total Income 2,215,115 2,199,885
------------ ------------
EXPENSES:
Partnership Administration - Affiliates 302,383 305,302
Partnership Administration and Property
Management - Unrelated Parties 128,323 511,571
Interest 23,751 15,812
Depreciation 536,038 565,120
------------ ------------
Total Expenses 990,495 1,397,805
------------ ------------
OPERATING INCOME 1,224,620 802,080
GAIN ON SALE OF REAL ESTATE 2,586,519 0
MINORITY INTEREST IN NET INCOME (102,477) (22,517)
------------ ------------
NET INCOME $3,708,662 $ 779,563
============ ============
NET INCOME ALLOCATED:
General Partners $ 37,087 $ 7,796
Limited Partners 3,671,575 771,767
------------ ------------
$3,708,662 $ 779,563
============ ============
NET INCOME PER LIMITED PARTNERSHIP UNIT
(23,148 and 23,162 weighted average Units
outstanding in 1995 and 1994, respectively) $ 158.61 $ 33.32
============ ============
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,708,662 $ 779,563
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 536,038 565,120
Gain on Sale of Real Estate (2,586,519) 0
Decrease in Receivables 12,003 15,437
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (14,865) 13,138
Increase (Decrease) in Contract Payable (77,388) 77,388
Increase in Security Deposit 0 37,307
Minority Interest 79,811 (6,502)
------------ ------------
Total Adjustments (2,050,920) 701,888
------------ ------------
Net Cash Provided By
Operating Activities 1,657,742 1,481,451
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate -
Net of Minority Interest 6,608,318 0
Decrease in Long-Term Receivable 0 38,904
------------ ------------
Net Cash Provided By
Investing Activities 6,608,318 38,904
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 245,400 1,084
Distributions to Partners (1,937,584) (2,058,051)
Redemption Payments (36,169) 0
Increase (Decrease) in Long-Term Debt - Net (176,556) 176,556
------------ ------------
Net Cash Used For Financing Activities (1,904,909) (1,880,411)
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,361,151 (360,056)
CASH AND CASH EQUIVALENTS, beginning of period 106,795 466,851
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $6,467,946 $ 106,795
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year $ 26,602 $ 12,961
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Note receivable acquired in sale of property $ 62,500
============
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1993 $ (26,460) $17,521,644 $17,495,184 23,161.79
Distributions (20,581) (2,037,470) (2,058,051)
Net Income 7,796 771,767 779,563
------------ ------------ ------------ ------------
BALANCE, December 31, 1994 (39,245) 16,255,941 16,216,696 23,161.79
Distributions (19,376) (1,918,208) (1,937,584)
Redemption Payments (362) (35,807) (36,169) (55.00)
Net Income 37,087 3,671,575 3,708,662
------------ ------------ ------------ ------------
BALANCE, December 31, 1995 $ (21,896) $17,973,501 $17,951,605 23,106.79
============ ============ ============ ============
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) Organization -
AEI Real Estate Fund XVII Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVII, 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. (AEI), performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on February 10, l988 when minimum
subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated on November 1, 1988 when the one-year offering
period expired. The Partnership received subscriptions for
23,388.7 Limited Partnership Units ($23,388,700).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$23,388,700 and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and l% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) Organization - (Continued)
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% to the General Partners. Losses will be allocated 98%
to the Limited Partners and 2% to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
(2) Summary of Significant Accounting Policies -
Financial Statement Presentation
The accounts of the Partnership are maintained on the
accrual basis of accounting for both federal income tax
purposes and financial reporting purposes.
Accounting Estimates
Management uses estimates and assumptions in preparing
these financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions may affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(2) Summary of Significant Accounting Policies - (Continued)
Given that the Partnership has had limited success in its
efforts to lease or dispose of certain properties, it is
reasonably possible that the Partnership's estimate that
it will recover the carrying amount of these properties
from future operations or sales will change in the near
term and the effect of the change could be material.
Cash Concentrations of Credit Risk
At times throughout the year, the Partnership's cash
deposited in financial institutions may exceed FDIC
insurance limits.
Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents include cash in checking, cash invested in
money market accounts, certificates of deposit, federal
agency notes and commercial paper with a term of three
months or less.
Income Taxes
The income or loss of the Partnership for federal income
tax reporting purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has
been given to income taxes in the accompanying financial
statements.
The tax return, the qualification of the Partnership as
such for tax purposes, and the amount of distributable
Partnership income or loss are subject to examination by
federal and state taxing authorities. If such an
examination results in changes with respect to the
Partnership qualification or in changes to distributable
Partnership income or loss, the taxable income of the
partners would be adjusted accordingly.
Real Estate
The Partnership's real estate is leased under long-term
triple net leases classified as operating leases. The
Partnership recognizes rental revenue on the accrual
basis according to the terms of the individual leases.
For leases which contain cost of living increases, the
increases are recognized in the year in which they are
effective.
Real estate is recorded at the lower of cost or estimated
net realizable value. The Financial Accounting Standards
Board has issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" which is effective for the
Partnership's fiscal year ended December 31, 1996. The
Partnership regularly reviews the carrying value of its
properties and will reduce properties to their net
realizable value as needed. Adoption of Statement 121 is
not expected to have a material effect on the
Partnership's operations.
The Partnership has capitalized as Investments in Real
Estate certain costs incurred in the review and
acquisition of the properties. The costs were allocated
to the land, buildings and equipment.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(2) Summary of Significant Accounting Policies - (Continued)
The buildings and equipment of the Partnership are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 30
years and 10 years respectively.
(3) Related Party Transactions -
On February 12, 1988, the Partnership acquired a 65%
interest in the J.T. McCord's restaurant in Mesquite, Texas
and a 50% interest in the Jiffy Lube Auto Care Center in
Garland, Texas. On February 16, 1988, the Partnership
acquired a 50% interest in a Cheddar's restaurant in
Indianapolis, Indiana. On March 1, 1988, the Partnership
acquired a 75% interest in two Jiffy Lube Auto Care Centers
in Dallas, Texas. On May 6, 1988, the Partnership acquired
a 41.88% interest in the Applebee's restaurant in Columbia,
South Carolina. The remaining interests in these properties
are owned by AEI Real Estate Fund XVI Limited Partnership,
an affiliate of the Partnership. On January 30, 1990, the
Partnership acquired a 65.09% interest in a Sizzler
restaurant in Cincinnati, Ohio. The remaining interest in
this property is owned by AEI Real Estate Funds XVI and
XVIII Limited Partnerships, affiliates of the Partnership.
Each Partnership owns a separate, undivided interest in the
properties. No specific agreement or commitment exists
between the Partnerships as to the management of their
respective interests in the properties, and the Partnership
that holds more than a 50% interest does not control
decisions over the other Partnership's interest. The
financial statements reflect only this Partnership's
percentage share of the properties' land, building and
equipment, liabilities, revenues and expenses.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(3) Related Party Transactions - (Continued)
AFM and AEI received the following compensation and
reimbursements for costs and expenses from the Partnership:
Total Incurred by the Partnership
for the Years Ended December 31
1995 1994
a. AEI and AFM are reimbursed for all costs
incurred in connection with managing the
Partnership's operations, maintaining the
Partnership's books and communicating
the results of operations to the Limited
Partners. $302,383 $305,302
======== ========
b. AEI and AFM are reimbursed for all direct
expenses they have paid on the Partnership's
behalf to third parties. These expenses included
printing costs, legal and filing fees, direct
administrative costs, outside audit and
accounting costs, taxes, insurance and other
property costs. In 1994, this amount includes
$401,594 of property operating and renovation
costs related to the J.T. McCord's and Sizzler
properties discussed in Note 4. $128,323 $511,571
======== ========
The payable to AEI Fund Management, Inc. represents the
balance due for the services described in 3a and b. This
balance is non-interest bearing and unsecured and is to be
paid in the normal course of business.
(4) Investments in Real Estate -
The Partnership leases its properties to various tenants
through non-cancelable triple net leases, which are
classified as operating leases. Under a triple net lease,
the lessee is responsible for all real estate taxes,
insurance, maintenance, repairs and operating expenses of
the property. The initial Lease terms are for 20 years
except for the Taco Cabana and the Children's Worlds, which
have Lease terms of 15 years. Most of the leases have
renewal options which may extend the Lease term an
additional 10 years. The Leases contain rent clauses which
entitle the Partnership to receive additional rent in future
years based on stated rent increases or if gross receipts
for the property exceed certain specified amounts, among
other conditions. Certain lessees have been granted options
to purchase the property. Depending on the lease, the
purchase price is either determined by a formula, or is the
greater of the fair market value of the property or the
amount determined by a formula. In all cases, if the option
were to be exercised by the lessee, the purchase price would
be greater than the original cost of the property.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate - (Continued)
The Partnership's properties are all commercial, single-
tenant buildings. The J.T. McCord's restaurant was
constructed in 1984. All other properties were constructed
in the year they were acquired. The Partnership acquired
the Cincinnati restaurants in 1990 and the Cheddar's
restaurant in Davenport, Iowa, in 1991. The remaining
properties were acquired during 1988 and 1989. There have
been no costs capitalized as improvements subsequent to the
acquisitions.
The cost of the properties and the related accumulated
depreciation at December 31, 1995 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
J.T. McCord's, Mesquite, TX $ 423,660 $ 532,683 $ 956,343 $ 176,185
Cheddar's Restaurant,
Indianapolis, IN 261,644 512,433 774,077 182,863
Jiffy Lube, Dallas, TX 193,479 261,145 454,624 86,262
am/pm, Carson City, NV 185,822 518,049 703,871 207,323
Taco Cabana, San Marcos, TX 279,727 733,778 1,013,505 236,616
Danny's Family Car Wash,
Phoenix, AZ 872,399 815,872 1,688,271 310,751
Denny's Restaurant,
Casa Grande, AZ 216,812 504,608 721,420 137,155
Children's World, St. Louis, MO 203,446 747,181 950,627 182,153
Children's World,
Merrimack, NH 282,530 876,712 1,159,242 208,063
Children's World, Chino, CA 357,793 947,725 1,305,518 230,984
Children's World, Palatine,IL 135,945 665,153 801,098 159,586
Sizzler, Cincinnati, OH 248,744 799,922 1,048,666 196,437
Sizzler, Cincinnati, OH 666,298 1,232,470 1,898,768 309,119
Cheddar's Restaurant,
Davenport, IA 524,026 1,006,908 1,530,934 172,633
------------ ----------- ----------- -----------
$ 4,852,325 $10,154,639 $15,006,964 $2,796,130
============ =========== =========== ===========
On April 22, 1993, the Partnership sold a 13.4893% interest
in the Applebee's restaurant in Virginia Beach, Virginia to
an unrelated third party. The Partnership owned the
Virginia Beach property as tenants-in-common with the
unrelated third party. The management of the property was
governed by a co-tenancy agreement between the Partnership
and the unrelated third party, which granted the Partnership
the authority to control the management of the property.
The Partnership accounted for its interest under the full
consolidation method whereby the unrelated third party's
interest in the property is reflected in the Partnership's
financial statements as a minority interest.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate - (Continued)
In September, 1995, the lessee exercised an option in the
Lease Agreement to purchase the property. On November 8,
1995, the sale closed with the parties receiving net sale
proceeds of $1,741,224, which resulted in a net gain of
$679,964. At the time of sale, the cost and related
accumulated depreciation was $1,279,192 and $217,932,
respectively. The Partnership's share of the net sale
proceeds and net gain was $1,496,613 and $596,181,
respectively.
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 $715,545 which resulted in a net gain of $307,167. At
the time of sale, the cost and related accumulated
depreciation of the property was $534,974 and $126,596,
respectively.
In July 1995, the lessee of the Applebee's restaurant in
Hampton, Virginia, exercised an option in the Lease
Agreement to purchase the property. On August 31, 1995, the
sale closed with the Partnership receiving net sale proceeds
of $1,747,127 which resulted in a net gain of $661,866. At
the time of sale, the cost and related accumulated
depreciation of the property was $1,287,072 and $201,811,
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 $322,442, which resulted in
a net gain of $78,244 for the Jiffy Lube in Garland, Texas.
At the time of sale, the cost and related accumulated
depreciation was $303,108 and $58,910, respectively. The
Partnership recognized net sale proceeds of $483,653, which
resulted in a net gain of $112,985 for one of the Jiffy
Lube's in Dallas, Texas. At the time of sale, the cost and
related accumulated depreciation was $454,300 and $83,632,
respectively.
In September, 1995, the lessee of the Applebee's restaurant
in Richmond, Virginia exercised an option in the Lease
Agreement to purchase the property. On October 30, 1995,
the sale closed with the Partnership receiving net sale
proceeds of $1,905,438, which resulted in a net gain of
$746,293. At the time of sale, the cost and related
accumulated depreciation was $1,375,732 and $216,587,
respectively. A portion of the net sale proceeds was used
to pay off the bank note and satisfy the mortgage on the
property as discussed in Note 6.
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
approximately $428,000 for the building and equipment and
approximately $50,000 for lost rent. The property will not
be rebuilt and the Partnership will list the land for sale.
The Partnership's cost and related accumulated depreciation
in the building and equipment at December 31, 1995 was
$512,433 and $182,863, respectively. The settlement will be
in excess of the net book value of the building and
equipment at December 31, 1995. The Partnership's cost of
the land is $261,644.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate - (Continued)
During 1995 and 1994, the Partnership distributed $930,047
and $23,621 of the net sale proceeds to the Limited and
General Partners which represented a return of capital of
$39.82 and $1.01 per Limited Partnership Unit, respectively.
The Managing General Partner is in the process of preparing
a proxy statement to propose an amendment to the Limited
Partnership Agreement that would allow the Partnership to
reinvest the majority of the sales proceeds in additional
properties.
If the amendment is approved, a property the Partnership may
purchase is a Tractor Supply Company Store in Tupelo,
Mississippi. The purchase price will be approximately
$1,300,000. The property will be leased to Tractor Supply
Company under a Lease Agreement with a primary term of 14
years and annual rental payments of approximately $139,750.
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.
Flagship continued to operate the property while attempting
to develop a plan of reorganization which would be
acceptable to the bankruptcy court and its creditors. In
1992, it became apparent that Flagship did not have the
financial resources to operate the property in compliance
with the Lease. 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.
At that time, various claims between Flagship and the
Partnership were dismissed. On April 21, 1993, the
Partnership's assignee, WIM, Inc. (WIM), took over
management of the restaurants.
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. However,
WIM was not able to operate the properties profitably and
was unable to make rental payments as provided in the Lease
Agreements. The Partnership's share of renovation and
operating expenses during this period was $222,976. To
reduce expenses and minimize the losses produced by this
property, the Partnership amended the agreement 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
property after WIM was unable to perform under the terms of
the Lease. The property is currently listed 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 property.
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 is
$23,833. In 1994, the Partnership expensed $103,595 to
record this liability and administrative costs related to
the bankruptcy.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) 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
$73,667 was completed in the fourth quarter of 1995.
The Partnership owns a 65.09% interest in the Sizzler
restaurant at the King's Island Theme Park near Cincinnati,
Ohio and a 100% interest in a Sizzler restaurant on Fields
Ertel Road in Cincinnati, Ohio. In November, 1992, after
reviewing the operating results of the lessee, the
Partnership agreed to amend the Lease Agreements of the
Sizzler restaurants. As of November, 1993, the lessee was
in default under the amended Lease Agreements. After
reviewing the lessee's operating results, the Partnership
determined that the lessee would be unable to operate the
restaurant in a manner capable of maximizing the
restaurants' sales. Consequently, at the direction of the
Partnership, a multi-unit restaurant operator assumed
operation of the restaurants while the Partnership reviewed
the available options.
In January, 1994, the Partnership closed the restaurant at
King's Island 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 property. The Partnership agreed
to indemnify the operator against operating deficits while
it reviewed the available options. As a result of the
indemnification, the Partnership recognized additional
Partnership administration and property management expenses
of $75,023 in 1994.
On July 15, 1994, the Partnership re-leased the Sizzler on
Fields Ertel Road to Fields Ertel Foods, Inc. (FEF) under a
Lease Agreement with a primary term of 20 years and annual
rental payments based on a percentage of sales. FEF was not
able to profitably operate the restaurant and closed the
restaurant. The total amount of rent not collected in 1995
and 1994 was $382,367 and $372,200, respectively, for the
two properties. These amounts were not accrued for
financial reporting purposes.
The Partnership has reached a verbal agreement to re-lease
the property on Fields Ertel Road to FFT Cincinnati Ltd.
under a triple net lease agreement with a primary term of 20
years which may be renewed for up to four consecutive five-
year periods. The annual base rent is $19,750 for the first
lease year and $75,000 for the second lease year, with rent
increases each subsequent lease year of two percent of the
prior year's rent. The Partnership may also receive
percentage rent if sales exceed certain amounts.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate - (Continued)
The Partnership's share of the minimum future rentals on the
non-cancelable Leases for years subsequent to December 31,
1995 are as follows:
1996 $ 1,489,112
1997 1,562,618
1998 1,594,607
1999 1,623,374
2000 1,653,228
Thereafter 12,332,986
--------------
$ 20,255,925
==============
The Partnership recognized contingent rents in 1995 and 1994
of $31,682 and $26,226, respectively.
(5) Security Deposit -
In February, 1994, the Partnership called a letter of credit
for $37,307 related to Danny's Family Car Wash in Phoenix,
Arizona. The Partnership is holding the funds as a security
deposit until the lessee renews the letter of credit.
(6) Long Term Debt -
On January 31, 1994, the Partnership entered into a five-
year bank term Note for $195,000 with interest at the prime
rate plus one half percent. Proceeds from the Note were
advanced to WIM for renovation and other restaurant costs
related to the J.T. McCord's property. The Partnership
provided a mortgage and a Lease Assignment Agreement on the
Applebee's restaurant in Richmond, Virginia as collateral
for the loan. On October 30, 1995, a portion of the net
proceeds from the sale of the Applebee's property was used
to pay off the outstanding principal balance of the bank
Note and satisfy the mortgage. In 1995 and 1994, interest
expense on the Note was $12,460 and $12,884, respectively.
(7) Line of Credit -
In September, 1994, the Partnership established a $150,000
unsecured line of credit at Fidelity Bank of Edina,
Minnesota. On January 5, 1995, the line of credit was
increased to $400,000. The line of credit bears interest at
the prime rate (8.5% on December 31, 1995 and 1994) plus one
percent on the outstanding balance, which is due on demand,
but in any event no later than January 5, 1996. The line of
credit was established to provide short-term financing to
cover any temporary cash deficits. As of December 31, 1995
and 1994, no amount was due on the line of credit. In 1995
and 1994, interest expense related to the line of credit was
$7,016 and $1,446, respectively.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(8) Other Income -
In March, 1995, the Partnership received $36,592 of
insurance proceeds for vandalism to the Kings Island Sizzler
restaurant. Damage to the property was minor and the
Partnership has elected not to make repairs at this time.
(9) Major Tenants -
The following schedule presents rent revenue from individual
tenants, or affiliated groups of tenants, who each
contributed more than ten percent of the Partnership's total
rent revenue for the years ended December 31:
Tenants who individually generate
10% or more of total rent revenue:
1995 1994
Tenants Industry
Apple South, Inc. Restaurant $ 554,764 $ 699,377
Children's World
Learning Centers,Inc. Child Care 484,237 470,789
Heartland Restaurant
Corporation and affiliate Restaurant 308,837 300,781
Apache Car Wash, Inc. Automotive Service 226,298 217,594
------------ ------------
Aggregate rent revenue of major tenants $ 1,574,136 $ 1,688,541
============ ============
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 75% 77%
============ ============
(10) Partners' Capital -
Cash distributions of $19,738 and $20,581 were made to the
General Partners and $1,918,208 and $2,037,470 were made to
the Limited Partners for the years ended December 31, 1995
and 1994, respectively. The Limited Partners' distributions
represent $82.87 and $87.97 per Limited Partnership Unit
outstanding using 23,148 and 23,162 weighted average Units
in 1995 and 1994. The distributions represent $82.87 and
$33.32 per Unit of Net Income and $-0- and $54.65 and per
Unit of return of contributed capital in 1995 and 1994,
respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed proceeds from the
property sales of $920,747 and $23,385 in 1995 and 1994,
respectively. The distributions reduced the Limited
Partners' Adjusted Capital Contributions.
Distributions of Net Cash Flow to the General Partners
during 1995 and 1994 were subordinated to the Limited
Partners as required in the Partnership Agreement. As a
result, 99% of distributions and income were allocated to
the Limited Partners and 1% to the General Partners.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(10) Partners' Capital - (Continued)
The Partnership may acquire Units from Limited Partners who
have tendered their Units to the Partnership. Such Units
may be acquired at a discount. The Partnership is not
obligated to purchase in any year more than 5% of the number
of Units outstanding at the beginning of the year and in no
event, obligated to purchase Units if such purchase would
impair the capital or operation of the Partnership.
During 1995, eleven Limited Partners redeemed a total of 55
Partnership Units for $35,807 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1994, the
Partnership did not redeem any Units from the Limited
Partners. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
After the effect of redemptions and the return of capital
from the sale of property, the Adjusted Capital
Contribution, as defined in the Partnership Agreement, is
$929.81 per original $1,000 invested.
(11) Income Taxes -
The following is a reconciliation of net income for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
1995 1994
Net Income For Financial
Reporting Purposes $ 3,708,662 $ 779,563
Depreciation for Tax Purposes Under
Depreciation For Financial
Reporting Purposes 138,584 108,697
Amortization of Start-Up and
Organization Costs (1,916) (26,122)
Income Accrued for Tax Purposes Over
(Under) Income For Financial
Reporting Purposes 0 (93,694)
Property Expenses for Tax Purposes
(Over) Under Expenses for Financial
Reporting Purposes (77,388) 124,333
Gain on Sale of Real Estate for
Tax Purposes Under Gain for
Financial Reporting Purposes (16,695) 0
------------ ------------
Taxable Income to Partners $ 3,751,247 $ 892,777
============ ============
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(11) Income Taxes - (Continued)
The following is a reconciliation of Partners' capital for
financial reporting purposes to Partners' capital reported
for federal income tax purposes for the years ended December
31:
1995 1994
Partners' Capital For
Financial Reporting Purposes $17,951,605 $16,216,696
Depreciation For Tax Purposes Over
Depreciation For Financial
Reporting Purposes (61,258) (199,842)
Capitalized Start-Up Costs
Under Section 195 218,409 218,409
Amortization of Start-Up and
Organization Costs (224,007) (222,091)
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 104,726 182,114
Gain on Sale of Real Estate for
Tax Purposes Over (Under) Gain
For Financial Reporting Purposes (15,554) 1,141
Organization and Syndication Costs
Treated as Reduction of Capital
For Financial Reporting Purposes 3,154,756 3,154,756
------------ ------------
Partners' Capital For
Tax Reporting Purposes $21,128,677 $19,351,183
============ ============
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(12) Fair Value of Financial Instruments -
The estimated fair values of the financial instruments, none
of which are held for trading purposes, are as follows at
December 31, 1995:
1995
Carrying Fair
Amount Value
Cash and Cash Equivalents $6,467,946 $6,467,946
Note Receivable 62,500 62,500
The carrying values of cash and cash equivalents and the
note receivable approximate fair values.
(13) Contingencies -
The Partnership is subject to legal proceedings and claims
which arise in the ordinary course of its business. In the
opinion of management, these matters are adequately covered
by insurance, or if not so covered, are without merit or are
of such a nature, or involve such amounts, as would not
materially affect the financial position or results of
operations of the Partnership.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The registrant is a limited partnership and has no
officers, directors, or direct employees. The General Partners
of the registrant are Robert P. Johnson and AFM. The General
Partners manage and control the Partnership's affairs and have
general responsibility and the ultimate authority in all matters
affecting the Partnership's business. The director and officers
of AFM are as follows:
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
(Continued)
Robert P. Johnson, age 51, is Chief Executive Officer,
President and Director and has held these positions since the
formation of AFM in July, 1987, and has been elected to continue
in these positions until March, 1997. From 1970 to the present,
he has been employed exclusively in the investment industry,
specializing in tax-advantaged limited partnership investments.
In that capacity, he has been involved in the development,
analysis, marketing and management of public and private
investment programs investing in net lease properties as well as
public and private investment programs investing in energy
development. Since 1971, Mr. Johnson has been the president, a
director and a registered principal of AEI Incorporated, which is
registered with the Securities and Exchange Commission as a
securities broker-dealer, is a member of the National Association
of Securities Dealers, Inc. (NASD) and is a member of the
Security Investors Protection Corporation (SIPC). Mr. Johnson
has been president, a director and the principal shareholder of
AEI Fund Management, Inc., a real estate management company
founded by him, since 1978. Mr. Johnson is currently a general
partner or principal of the general partner in fifteen other
limited partnerships.
Mark E. Larson, age 43, is Executive Vice President,
Treasurer and Chief Financial Officer and has been elected to
continue in these positions until March, 1997. Mr. Larson has
been Treasurer since the formation of AFM in July, 1987,
Executive Vice President since December, 1987 and Chief Financial
Officer since January, 1990. In January, 1993, Mr. Larson was
elected to serve as Secretary of AFM and will continue to serve
until March, 1997. Mr. Larson has been employed by AEI Fund
Management, Inc. and affiliated entities since 1985. From 1979
to 1985, Mr. Larson was with Apache Corporation as manager of
Program Accounting responsible for the accounting and reports for
approximately 46 public partnerships. Mr. Larson is responsible
for supervising the accounting functions of AFM and the
registrant.
ITEM 10. EXECUTIVE COMPENSATION.
The General Partner and affiliates are reimbursed at cost
for all services performed on behalf of the registrant and for
all third party expenses paid on behalf of the registrant. The
cost for services performed on behalf of the registrant is actual
time spent performing such services plus an overhead burden.
These services include organizing the registrant and arranging
for the offer and sale of Units, reviewing properties for
acquisition and rendering administrative and management services.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
AFM, the Managing General Partner of the registrant, and
Robert P. Johnson, its Individual General Partner, contributed
$1,000 in total for their interest in the registrant. See Item 1
for a discussion of their share of the registrant's profits and
losses. As of December 31, 1995, Mr. Johnson and his wife own a
total of twenty Limited Partnership Units (less than 1% of the
Units outstanding).
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The registrant, AFM and its affiliates have common
management and utilize the same facilities. As a result, certain
administrative expenses are allocated among these related
entities. All of such activities and any other transactions
involving the affiliates of the General Partner of the registrant
are governed by, and are conducted in conformity with, the
limitations set forth in the Limited Partnership Agreement of the
registrant.
The following table sets forth the forms of compensation,
distributions and cost reimbursements paid by the registrant to
the General Partners or their Affiliates in connection with the
operation of the Fund and its properties through the period from
inception through December 31, 1995.
Person or Entity Amount Incurred From
Receiving Form and Method Inception (February 10, 1988)
Compensation of Compensation To December 31, 1995
AEI Incorporated Selling Commissions equal to $2,338,870
8% of proceeds plus a 2%
nonaccountable expense allowance,
most of which was reallowed to
Participating Dealers.
General Partners Reimbursement at Cost for other $ 815,886
and Affiliates Organization and Offering Costs.
General Partners Reimbursement at Cost for all $ 785,696
and Affiliates Acquisition Expenses
General Partners 1% of Net Cash Flow in any fiscal $ 142,373
year until the Limited Partners have
received annual, non-cumulative
distributions of Net Cash Flow equal
to 10% of their Adjusted Capital
Contributions and 10% of any remaining
Net Cash Flow in such fiscal year.
General Partners Reimbursement at Cost for all $2,070,399
and Affiliates Administrative Expenses attributable
to the Fund, including all expenses
related to management and disposition
of the Fund's properties and all other
transfer agency, reporting, partner
relations and other administrative
functions.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(Continued)
Person or Entity Amount Incurred From
Receiving Form and Method Inception (February 10, 1988)
Compensation of Compensation To December 31, 1995
General Partners 15% of distributions of Net $ 19,231
Proceeds of Sale other than
distributions necessary to
restore Adjusted Capital
Contributions and provide a 6%
cumulative return to Limited Partners.
The General Partners will receive
only 1% of distributions of Net Proceeds
of Sale until the Limited Partners have
received an amount equal to: (a) their
Adjusted Capital Contributions, plus (b)
an amount equal to 14% of their Adjusted
Capital Contributions per annum, cumulative
but not compounded, less (c) all previous
cash distributions to the Limited Partners.
The limitations included in the Partnership Agreement
require that the cumulative reimbursements to the General
Partners and their affiliates for administrative expenses not
allowed under the NASAA Guidelines ("Guidelines") will not exceed
the sum of (i) the front-end fees allowed by the Guidelines less
the front-end fees paid, (ii) the cumulative property management
fees allowed but not paid, (iii) any real estate commission
allowed under the Guidelines, and (iv) 10% of Net Cash Flow less
the Net Cash Flow actually distributed. The reimbursements not
allowed under the Guidelines include a controlling person's
salary and fringe benefits, rent and depreciation. As of
December 31, 1995, the cumulative reimbursements to the General
Partners and their affiliates did not exceed these amounts.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
A. Exhibits -
Description
3.1 Certificate of Limited
Partnership (incorporated by reference to
Exhibit 3.1 of the registrant's
Registration Statement on Form S-11 filed
with the Commission on July 30, 1987 [File
No. 33-16159]).
3.2 Limited Partnership
Agreement (incorporated by reference to
Exhibit 3.2 of the registrant's
Registration Statement on Form S-11 filed
with the Commission on July 30, 1987 [File
No. 33-16159]).
10.1 Net Lease Agreement dated
December 16, 1987 between the Partnership
and Flagship, Inc. relating to the property
at 3808 Town Crossing Boulevard, Mesquite,
Texas (incorporated by reference to Exhibit
10.1 of Form 10-K filed with the Commission
on July 28, 1992).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
(A) Exhibits -
Description
10.2 Net Lease Agreement dated
February 16, 1988 between the Partnership
and Phaedra Partners III, Ltd. relating to
the property at 3769 Commercial Drive,
Indianapolis, Indiana (incorporated by
reference to Exhibit 10.3 of Form 10-K
filed with the Commission on July 28,
1992).
10.3 Assignment dated March 1,
1988 between the Partnership and Fund XVI
of the Net Lease Agreement dated July 23,
1987 assigned to Fund XVI by Westmoreland
Real Estate, Inc. (incorporated by
reference to Exhibit 10.4 of Form 10-K
filed with the Commission on July 28, 1992)
10.4 Net Lease Agreement dated
November 4, 1988 between the Partnership
and B. Wells O'Brien & Co. relating to the
property at Lassen & William, Carson City,
Nevada (incorporated by reference to
Exhibit 10.10 of Form 10-K filed with the
Commission on July 28, 1992).
10.5 Net Lease Agreement dated
November 14, 1988 between the Partnership
and Taco Cabana, Inc. relating to the
property at 135 Long Street, San Marcos,
Texas (incorporated by reference to Exhibit
10.11 of Form 10-K filed with the
Commission on July 28, 1992).
10.6 Net Lease Agreement dated
February 9, 1989 between the Partnership
and 43rd & Indian School, Inc. relating to
the property at 43rd Avenue & W. Indian
School Road, Phoenix, Arizona (incorporated
by reference to Exhibit 10.12 of Form 10-K
filed with the Commission on July 28,
1992).
10.7 Sublease Agreement dated
December 14, 1989 between 43rd & Indian
School, Inc., Albert J. Lankes, Sr. and
Anna L. Lankes and the Partnership of the
Lease on the property at 43rd Avenue and W.
Indian School Road, Phoenix, Arizona
(incorporated by reference to Exhibit 10.13
of Form 10-K filed with the Commission on
July 28, 1992).
10.8 Net Lease Agreement dated
March 1, 1989 between the Partnership and
K.W.W. Properties, Inc. relating to the
property at 1851 E. Florence Boulevard,
Casa Grande, Arizona (incorporated by
reference to Exhibit 10.14 of Form 10-K
filed with the Commission on July 28,
1992).
10.9 Net Lease Agreement dated
September 29, 1989 between the Partnership
and Children's World Learning Centers, Inc.
relating to the property at 12790 Fee Fee
Road, St. Louis, Missouri (incorporated by
reference to Exhibit 10.15 of Form 10-K
filed with the Commission on July 28,
1992).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
(A) Exhibits -
Description
10.10 Net Lease Agreement
dated September 29, 1989 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
325 Daniel Webster Highway, Merrimack, New
Hampshire (incorporated by reference to
Exhibit 10.16 of Form 10-K filed with the
Commission on July 28, 1992).
10.11 Net Lease Agreement
dated September 29, 1989 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
14635 Pipeline Avenue South, Chino,
California (incorporated by reference to
Exhibit 10.17 of Form 10-K filed with the
Commission on July 28, 1992).
10.12 Net Lease Agreement
dated September 29, 1989 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
838 N. Quentin Road, Palatine, Illinois
(incorporated by reference to Exhibit 10.18
of Form 10-K filed with the Commission on
July 28, 1992).
10.13 Net Lease Agreement
dated November 1, 1991 between the
Partnership and Heartland Restaurant
Corporation relating to the property at
1221 E. Kimberly, Davenport, Iowa
(incorporated by reference to Exhibit 10.21
of Form 10-K filed with the Commission on
July 28, 1992).
10.14 Net Lease Agreement
dated April 1, 1994 between the
Partnership, AEI Real Estate Fund XVI
Limited Partnership, and WIM, Inc. relating
to the property at 3808 Town Crossing
Boulevard, Mesquite, Texas (incorporated by
reference to Exhibit 10.25 of Form 10-K
filed with the Commission on March 30, 1995).
10.15 First Amendment to
Lease dated October 15, 1994 between the
Partnership, AEI Real Estate Fund XVI
Limited Partnership, and WIM, Inc. relating
to the property at 3808 Town Crossing
Boulevard, Mesquite, Texas (incorporated by
reference to Exhibit 10.26 of Form 10-K
filed with the Commission on March 30, 1995).
10.16 Amendment to Lease
dated January 2, 1995 between the
Partnership and Huntington Restaurants
Group, Inc. relating to the property at
1851 E. Florence Boulevard, Casa Grande,
Arizona (incorporated by reference to
Exhibit 10.27 of Form 10-K filed with the
Commission on March 30, 1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
(A) Exhibits -
Description
10.17 Real Estate Purchase
Agreement dated August 25, 1995 between the
Partnership, AEI Real Estate Fund XVI
Limited Partnership and Jiffy Lube
International of Maryland, Inc. relating to
the properties at 5763 Samuell Boulevard,
Dallas, Texas and 201 South First Street,
Garland, Texas.
10.18 Sale and Leaseback
Financing Commitment Agreement dated
September 19, 1995 and Amendment to Sale
and Leaseback Financing Commitment
Agreement dated October 18, 1995 between
AEI Fund Management, Inc. and Tractor
Supply Company, Inc. relating to the
property at U.S. 45 in Tupelo, Mississippi
(incorporated by reference to Exhibit 10.1
of Form 10-QSB filed with the Commission on
November 2, 1995).
10.19 Net Lease Agreement
dated September 21, 1995 between the
Partnership and FFT Cincinnati, Ltd.
relating to the property at 9035 Fields
Ertel Road, Cincinnati, Ohio (incorporated
by reference to Exhibit 10.2 of Form 10-QSB
filed with the Commission on November 2,1995).
27 Financial Data Schedule for
year ended December 31, 1995.
B. Reports on Form 8-K and Form 8-K/A - See
previously filed report dated November 8, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AEI REAL ESTATE FUND XVII
Limited Partnership
By: AEI Fund Management XVII, Inc.
Its Managing General Partner
March 15, 1996 By:/s/ Robert P. Johnson
Robert P. Johnson, President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert P. Johnson President(Principal Executive Officer) March 15, 1996
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E. Larson Executive Vice President, Treasurer March 15, 1996
Mark E. Larson and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000819577
<NAME> AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 6,467,946
<SECURITIES> 0
<RECEIVABLES> 79,092
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,547,038
<PP&E> 15,006,964
<DEPRECIATION> (2,796,130)
<TOTAL-ASSETS> 18,757,872
<CURRENT-LIABILITIES> 806,267
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,951,605
<TOTAL-LIABILITY-AND-EQUITY> 18,757,872
<SALES> 0
<TOTAL-REVENUES> 2,215,115
<CGS> 0
<TOTAL-COSTS> 966,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,751
<INCOME-PRETAX> 3,708,662
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,708,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,708,662
<EPS-PRIMARY> 158.61
<EPS-DILUTED> 158.61
</TABLE>
REAL ESTATE PURCHASE AGREEMENT
1. PARTIES. The parties to this Real Estate Purchase
Agreement (this "Agreement") are AEI Real Estate Fund
XVI Limited Partnership, a Minnesota limited partnership
("Seller"),whose address is 30 East Seventh Street,
1300 Minn. World Trade Center, St. Paul, MN 55101, and
JIFFY LUBE INTERNATIONAL OF MARYLAND, INC., a Maryland
corporation (the "Purchaser"), whose principal address
is 700 Milam, Houston, Texas 77002.
2. PURPOSE/PROPERTY. Pursuant to the terms of this
Agreement, Seller will sell and the Purchaser will
purchase those certain tracts of land identified as:
(a) 5763 Samuell Blvd., City of Dallas, County of Dallas,
State of Texas, and
(b) 201 South First Street, City of Garland, County of
Dallas, State of Texas,
(each of which is called a "Property" in this Agreement"),
being more fully described by metes and bounds on
Exhibit A-1 and Exhibit A-2, respectively, attached hereto
and made a part hereof for all purposes, together with
any and all personal property located thereon as of the
date of closing.
3. PURCHASE PRICE. The total purchase price for each
of the Properties (including the consideration for any
improvements or fixtures located at each of the Properties,
if any) is SIX HUNDRED FIFTY THOUSAND and NO/100 DOLLARS
($650,000.00) (the "Purchase Price"), of which SIX HUNDRED
THOUSAND and NO/100 DOLLARS is to be paid by wire
transfer into Seller's account, subject to the
adjustments described below, if any, at Closing, and
FIFTY THOUSAND and NO/100 DOLLARS ($50,000.00) is to be
evidenced by a promissory note delivered by the
Purchaser to the Seller at Closing and is to be paid
by the Purchaser's check or, at the Purchaser's option,
by wire transfer into Seller's account upon the earlier
of the following events: (a) the expiration of one year
from the date of Closing, or (b) the expiration of ten days
after the closing of the sale of the Property in
question by Purchaser to a third party. The obligation
to pay such FIFTY THOUSAND and NO/100 DOLLARS as part of
the Purchase Price of each Property shall be secured by
deeds of trust.
4. EARNEST MONEY DEPOSIT AND RATIFICATION OF LEASE. In
lieu of Earnest Money Deposit, both Seller and
Purchaser ratify and confirm that the properties are
currently encumbered by Lease Agreements ("Lease") dated
July 23, 1987 by and between Seller (as "Landlord") and
Purchaser (as "Tenant"). In accordance with Paragraph
15 herein, should this Agreement terminate for any
reason, the Lease shall continue in full force and
effect throughout the term of the Lease. The parties
confirm that the Lease shall remain in full force and
effect from the date hereof until this Agreement is either
terminated or Closing shall occur as contemplated
hereunder.
5. TITLE. Title to the Properties is to be conveyed by a
General Warranty Deed, in a form commonly used in the state
in which the Property is located. The Properties will
be conveyed in fee simple, subject to:
(a) local and/or municipal zoning regulations, ordinances,
building restrictions, regulations and any violations
thereof;
(b) all assessments, costs and charges for any and all
municipal improvements affecting or benefiting the
Property; and
(c) covenants, restrictions, easements, agreements,
encumbrances and defects in title of record,
affecting or benefiting the Property, same being
specifically described as indicated in the Title
Report.
6. TITLE REPORT/COMMITMENT. Seller shall deliver to
Purchaser, at Seller's sole cost and expense, a Commitment
for Title Insurance ("the Title Commitment") indicating
the present status of the title to the Properties
within thirty (30) days of the effective date of this
Agreement. The Title Commitment shall show all matters
affecting title to the Properties, including all
exceptions, easements, restrictions, right-of ways,
covenant, reservations, encumbrances, and other conditions
affecting the Properties which will appear in the Title
Commitment. Within fifteen (15) days of the receipt of
such Title Policy, Purchaser, if unsatisfied with the status
of title, shall provide Seller with a written statement
setting forth Purchaser's title objections (the "Notice of
Title Objections"). In the event Seller elects to do so,
Seller shall have fifteen (15) days from the receipt of the
Notice of Title Objections within which to take such
actions as are necessary to discharge the objections. If
Seller is unable or unwilling to discharge the objections
within the aforesaid fifteen (15) day period, Purchaser
shall elect to (a) accept such title as Seller may be able
to deliver or (b) terminate this Agreement by providing
Seller with written notice of termination. Upon Seller's
receipt of a notice of termination, this Agreement shall be
deemed null and void, with neither party having any
further rights, obligations or liabilities hereunder, and
thereafter the Lease shall continue in full force and
effect throughout the term of the Lease. If Seller does
not receive a Notice of Title Objections within the
aforementioned fifteen (15) day review period, then it
shall be conclusively deemed that Purchaser is satisfied
with the condition of title as shown on the Title Report
and Purchaser shall have waived its right to object to the
status of title.
7. HAZARDOUS MATERIALS. (a) Definition. As used in this Section
7, the phrase "Hazardous Materials" shall mean (1) any "hazardous
waste" as defined by the resource Conversation and Recovery Act of
1976, as amended from time to time, and the regulations promulgated
under that act; (2) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and the regulations
promulgated under that act; (3) any oil, petroleum products, or
their byproducts; and (4) any substance now regulated by
any federal, state, or local governmental authority.
(b) Purchaser's indemnity. The Purchaser shall defend, indemnify
and hold the Seller harmless from any and all claims, demands,
actions and causes of action, including reasonable attorney's fees,
connected with or related to contamination of either Property by
any Hazardous Materials which occurs or occurred at any time
before the Purchaser sells such Property to a third party
unrelated to Purchaser, provided that Seller gives Purchaser
timely notice of such claims and a reasonable opportunity to
defend against such claim and/or to conduct appropriate remedial
measures, and provided further that under no circumstances shall
the Purchaser be required to conduct remediation efforts not
required by applicable governmental regulation.
8. DEFAULT; REMEDIES. If the conditions, if any, to
Purchaser's obligation to close this transaction are satisfied
or waived by Purchaser and Purchaser nevertheless fails,
through no fault of Seller, to close the purchase of the
Properties, Seller's sole remedy shall consist of the termination
of this Agreement and thereafter the Lease Agreement shall
continue in full force and effect throughout the term of the
Lease. In the event Seller fails, through no fault of
Purchaser, to close the sale of the Properties, Purchaser shall
be entitled to termination of this Agreement and, thereafter the
Lease Agreement shall continue in full force and effect throughout
the term of the Lease.
9. POSSESSION. Purchaser is currently in possession of the
Properties as Tenant under the Lease. Seller will transfer title of
ownership at closing and the Lease between Seller (as "Landlord")
and Purchaser (as "Tenant) shall be deemed to be terminated
without the need for the parties to execute any formal
documentation, unless otherwise agreed to by the parties.
10. TAXES AND UTILITY ASSESSMENTS. Real and personal property
taxes, water and sewer assessments are currently paid by
Purchaser, as Tenant under the Lease. Seller shall assist
Purchaser with changing all taxes and utilities over to
Purchaser's name.
11. TRANSFER TAXES AND OTHER CHARGES. Seller shall pay the cost
of preparation of the General Warranty Deed,(text deleted RPJ/RAH)
and shall pay its own attorney's fees. Purchaser shall pay the cost
of(section revised pursuant to the agreement RPJ/RAH) any Deed of
Trust recording fees, any Deed of Trust registration fees,
any , investigations performed for the Properties by
Purchaser, wire transfer fees (if applicable) and any attorney's
fees incurred by Purchaser. Except as otherwise specified in
Paragraph 12, Seller and Purchaser shall pay the customary costs
as designated by the specific City and County the property is
situated in, as setforth in Paragraph 2, which are incurred in
connection with the purchase contemplated hereby, including any
recording fees incurred in recording the deed and any other
conveyance documents and any applicable realty transfer taxes.
12. TITLE INSURANCE. Seller, at its expense, shall provide
Purchaser with a Title Commitment and a title insurance policy,
if such policy is desired by Purchaser. Purchaser is responsible
for the payment of any other costs and expenses, including costs
incurred by Purchaser for title examination.
13. BROKER'S COMMISSION. Both Seller and Purchaser acknowledge
that there is no real estate broker involved in this transaction
and no commission is due to any party.
14. CLOSING. The closing of title to the Properties shall take
place at the offices of REPUBLIC TITLE, 7001 PRESTON ROAD, SUITE
120, DALLAS, TEXAS 75205, and may be completed via mail
transmittal of documentation and funds, at a time set forth in a
written notice to close ("Notice to Close") sent by Seller to
Purchaser. The Notice to Close shall set forth a closing date
which shall not be more than thirty (30) days after all
contingencies have been met, subject to fulfillment of the
requirements of this Agreement. In any case, the Closing Date
shall not be more than Ninety (90) days after the date of this
Agreement, unless mutually extended by both parties.
15. TERMINATION/RISK OF LOSS AND CONDEMNATION. This Agreement
will expire if there is no closing within the time specified in
the Notice of Closing, plus any mutually agreed extensions of
such time. In addition to other provisions for termination
provided for herein, this Agreement may be terminated by the
Purchaser prior to closing if:
(a) all or part of the buildings, fixtures, equipment or
improvements to be conveyed pursuant to this Agreement
(excluding any equipment which is not repairable as of the
date of this Agreement or constitutes Seller's Property)
are destroyed or damaged beyond repair prior to closing;
provided that such damage is not the result of the
negligence or willful acts or omissions of Purchaser, its
agents, representatives or visitors; or
(b) all or a substantial part of the Property is condemned or
Seller receives notice of an intended condemnation by any
governmental authority prior to closing.
If the Purchaser proceeds to closing without terminating
this Agreement, Purchaser shall be deemed to have waived any
of the grounds upon which it could have terminated this
Agreement; provided, however, in the event Purchaser
proceeds with the purchase of the Property despite a notice
of condemnation having been served on Seller, at closing
Seller shall execute any and all documentation necessary to
convey to Purchaser any and all rights that Seller may have
regarding recovery in any condemnation proceeding relating to
the Property commenced after closing. If Purchaser terminates
this Agreement pursuant to the provisions of this Agreement,
neither party shall have any claim for damages against the
other for breach of this Agreement except that each party shall
be responsible for its own out-of-pocket expenses incurred in
connection with this transaction. Should this Agreement
terminate for any reason, the Lease (as defined in Paragraph 4)
shall remain in full force and effect.
16. WARRANTIES AND REPRESENTATIONS. Each party
represents, warrants and covenants to the other party that;
(i) it has full authority to enter into this Agreement (ii) it
agrees to be bound by the terms and conditions of this
Agreement, and (iii) it agrees to perform its respective
obligations. Seller further represents and warrants to
Purchaser that all latent and patent defects relating to the
Properties has been fully disclosed by Seller to Purchaser.
17. NOTICES. All notices and other communications required
or permitted to be given or delivered hereunder shall be in
writing and shall be delivered personally, transmitted by fax,
sent by overnight courier, or by certified mail, postage
prepaid and return receipt requested, directed to the party
intended at the address set forth below, or at such other
address as may be designated by such party by notice given
to the other party in the manner described above, and shall
be effective upon receipt:
Seller: Purchaser:
AEI Real Estate Fund JIFFY LUBE INTERNATIONAL
30 East Seventh Street OF MARYLAND, INC.
1300 Minn. World Trade Center 700 Milam St.
St. Paul, MN 55101 Houston, TX 77002
ATTN:Real Estate Department
18. SURVIVAL. Upon execution of this Agreement, this
Agreement shall survive the consummation of the
transaction and the delivery of the General Warranty Deed
and any other conveyance documents from Seller to Purchaser on
the Closing Date, and all the terms and conditions hereof
shall be and remain in full force and effect between the
parties.
19. MODIFICATION. This Agreement supersedes any and all
prior discussions and agreements between Seller and
Purchaser with respect to the purchase of the Properties
and other matters contained herein, and this Agreement
contains the sole and entire understanding between the parties
hereto with respect to the transaction contemplated
herein. This Agreement shall not be modified or amended,
except by written agreement executed by both parties.
20. APPLICABLE LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
state in which the Properties are located.
21. TIME. Time is and shall be the essence of this Agreement.
22. EXECUTION. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one
and the same instrument.
25. EFFECTIVE DATE. This Agreement shall be effective as of
the date on which it has been completely executed on behalf of
both Seller and the Purchaser, and null and void if not signed
by both parties before August 30, 1995. (Parties changed date from
August 24 RPJ/RAH)
26. CO-TENANCY INTERESTS. Seller holds fee title to the
Properties in co-tenancy with its affiliate AEI Real Estate Fund
XVII Limited Partnership ("Fund XVII"). Fund XVII joins herein
to evidence its consent to the sale of Fund XVII's interest
in the Property and shall join in the Deed as its respective
interests shall appear. Fund XVII holds an undivided 75%
interest in the Property described in paragraph 2(a), and an
undivided 50% interest in the Property described in
paragraph 2(b). The parties further acknowledge and agree
that Seller and Fund XVII shall be entitled to the benefits of
the sales proceeds, Notes and Deeds of Trust in proportion to
their respective interests, but for accommodation purposes the
Note and Deed of Trust shall run from Purchaser only to Seller.
AEI REAL ESTATE FUND XVI JIFFY LUBE INTERNATIONAL OF
LIMITED PARTNERSHIP MARYLAND, INC.
By: AEI FUND MANAGEMENT XVI, INC.
its corporate general partner
By: /s/ Robert P. Johnson By: /s/ Richard A. Holmes
Name: Robert P. Johnson Richard A. Holmes
Title: President Vice President
Date: 8-25-95 Date: 8/28/95
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
By: AEI FUND MANAGEMENT XVII, INC.
its corporate general partner
By: /s/ Robert P. Johnson
Name: Robert P. Johnson
Title: President
Date: 8-25-95
EXHIBITS "A-1" & "A-2"
SEE ATTACHED LEGAL DESCRIPTIONS
EXHIBIT "A-1"
Being part of Lot 6 and 7A, Block A/8472, REPLAT OF
THORNTON MILLER CENTRE, an addition to the City of Dallas,
a plat of same being recorded in the Deed Records of
Dallas County, Texas, in Volume 85174 at Page 5253, and
being particularly described as follows:
BEGINNING at a steel rod set in the South line of said Lot 6
a distance of 155.00 feet Westerly along said South line
from the Southeast corner of said Lot 6, said South line
being a curve having a radius of 2804.79 and chord bearing
South 89 degrees 23 minutes 37 seconds West 154.99 feet,
said beginning point being in the North line of Samuell
Boulevard;
THENCE Westerly with a curve to the right and along South
line of said Lot 6 and North line of Samuell Boulevard,
said curve having a central angle of 01 degrees 15 minutes
59 seconds, a radius of 2804.79 feet for a total distance
of 62.00 feet to stake for corner;
THENCE North 00 degrees 28 minutes 35 seconds East 208.11
feet to iron stake set for corner, said stake also being in
a South line of said Lot 7A;
THENCE North 42 degrees 43 minutes 12 seconds East across
said Lot 7A 20.26 feet to iron stake set for corner, said
stake also being the Southwest corner of Lot 8 of said Block
A/8472;
THENCE South 89 degrees 31 minutes 25 seconds East with
the South line of said Lot 8 and a North line of said Lot 7A
48.36 feet to a steel rod set for a corner;
THENCE South 00 degrees 28 minutes 35 seconds West 224.44
feet to PLACE OF BEGINNING and containing 13,775.99 square
feet of land, more or less.
EXHIBIT "A2"
201 SOUTH FIRST STREET, GARLAND, TEXAS
BEING ALL of LOT 1 and all of LOT 2 except that part
conveyed by W. F. Wallace to the State of Texas by deed
filed September 3, 1969, and recorded in Volume 69171, Page
2178 of the Deed Records of Dallas County, Texas, in
Brackett's Subdivision, an Addition to the City of Garland,
Texas, according to the plat thereof recorded in Volume 8,
Page 427, Map Records, Dallas County, Texas, said property
being described by metes and bounds as follows:
BEGINNING at the intersection of the south line of Avenue A
with the west line of S. First Street, both 50.0 feet wide,
said beginning point being the northeast corner of said Lot
1;
THENCE south, along the west line of S. First Street, a
distance of 128.27 feet to a point for corner, the
northeast corner of said State of Texas tract, being 2.73
feet north of the southeast corner of said Lot 2;
THENCE westerly, along the north line of said State of
Texas tract, a distance of 125.0 feet to a point for
corner, being 2.74 feet north of the southeast corner of
said Lot 2;
THENCE north, along the west line of Lots 2 and 1, a
distance of 128.26 feet to a point for corner, the
northwest corner of said Lot 1 on the south line of Avenue A;
THENCE east, along the south line of Avenue A, a distance
of 125.0 feet to the place of beginning;
Containing 16,033 square feet of land, more or less.
