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, 1996
Commission file number: 0-18289
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
(Name of Small Business Issuer in its Charter)
State of Minnesota 41-1622463
(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, 1996 were
$1,724,727.
As of February 28, 1997, there were 21,718.38 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 $21,718,380.
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 XVIII Limited Partnership (the
"Partnership" or the "Registrant") is a limited partnership which
was organized pursuant to the laws of the State of Minnesota on
September 20, 1988. The registrant is comprised of AEI Fund
Management XVIII, 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 December 5, 1988. The
Partnership commenced operations on February 15, 1989 when
minimum subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated December 4, 1990 when the extended offering period
expired. The Partnership received subscriptions for 22,783.05
Limited Partnership Units ($22,783,050).
The Partnership was organized to acquire, initially on a
debt-free basis, existing and newly constructed commercial
properties located in the United States and Canada, 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-one
properties, including partial interests in five properties,
totaling $18,868,379. 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
aggregate purchase price of all Partnership properties.
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 14 to 20 years. The leases
provide for base annual rental payments, payable in monthly
installments, and contain rent clauses which entitle the
Partnership to receive additional rent in future years based on
stated rent increases or if gross receipts for the property
exceed certain specified amounts, among other conditions.
The leases provide the lessee with two to three 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)
The Partnership owns a 4.1022% interest in a Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a Sizzler
restaurant in Springboro, Ohio, and a 100% interest in a Sizzler
restaurant in Fairfield, Ohio. In November, 1993, after
reviewing the lessee's operating results, the Partnership
determined that the lessee would be unable to operate the
restaurants 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 and June, 1994, the Partnership closed the
restaurants in Cincinnati and Springboro, respectively, and
listed them for sale or lease. While the properties are vacant,
the Partnership is responsible for the real estate taxes and
other costs required to maintain the properties.
On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. Fairfield was not able
to profitably operate the restaurant and closed the restaurant.
The Partnership is reviewing the available options, which include
selling or re-leasing the property.
On January 23, 1997, the Partnership sold its interest in
the Cincinnati restaurant to an unrelated third party. The
Partnership received net sales proceeds of approximately $19,900,
which resulted in a net loss of approximately $31,700, which was
recognized as a real estate impairment in 1996.
In December, 1996, the Partnership, in order to avoid
additional property management expenses, decided to sell the
Sizzler properties in Springboro and Fairfield rather than to
continue to attempt to re-lease the properties. As a result, the
properties have been reclassified on the balance sheet to Real
Estate Held for Sale. In addition, based on an analysis of
market conditions in the area, it was determined that a sale of
the properties would result in net proceeds of approximately
$800,000. The Partnership's share of the proceeds would be
approximately $773,000. A charge to operations for real estate
impairment of $1,645,600 was recognized, which is the difference
between book value at December 31, 1996 of $2,418,600 and the
estimated market value of $773,000. The charge was recorded
against the cost of the land, building and equipment.
In August, 1995, the lessee of the two Rally's properties
filed for reorganization. After reviewing the operating results
of the lessee, the Partnership agreed to amend the Leases of the
two properties. Effective December 1, 1995, the Partnership
amended the Leases to reduce the base rent from the current
annual rent of $47,498 and $48,392 to $15,000 for each property.
The Partnership could receive additional rent in the future equal
to 6.75% of the amount by which gross receipts exceed $275,000.
In 1997, the Leases, as amended, were confirmed as part of the
reorganization plan. The lessee has agreed to pay all post-
petition rents due and the Partnership's related administrative
and legal expenses. The Partnership is owed $29,128 of pre-
petition rent, which was not accrued for financial reporting
purposes due to the uncertainty of collection.
On July 6, 1995, the Partnership sold the Cheddar's
restaurant in Columbus, Ohio, to the lessee. The Partnership
received net sale proceeds of $1,259,320, which resulted in a net
gain of $105,291. At the time of sale, the cost and related
accumulated depreciation was $1,306,191 and $152,162,
respectively.
On September 1, 1995, the Partnership sold the Applebee's
restaurant in Memphis, Tennessee, to the lessee. The Partnership
received net sale proceeds of $1,444,822, which resulted in a net
gain of $465,562. At the time of sale, the cost and related
accumulated depreciation was $1,126,919 and $147,659,
respectively.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
The Partnership used the majority of the proceeds from the
two property sales in 1995 to purchase two properties in 1996, as
discussed below. The remainder of the proceeds from these sales
were distributed to the Partners in 1995 and 1996.
On April 10, 1996, the Partnership purchased an 85.0%
interest in a Tractor Supply Company in Bristol, Virginia for
$1,094,367. The property is leased to Tractor Supply Company
under a Lease Agreement with a primary term of 14 years and
annual rental payments of $116,686. The remaining interest in
the property was purchased by the Individual General Partner of
the Partnership.
On August 29, 1996, the Partnership purchased a 32.2%
interest in a Champps Americana restaurant in Columbus, Ohio for
$826,070. The property is leased to Americana Dining Corporation
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $90,834. The remaining interest in the
property was purchased by AEI Income & Growth Fund XXI Limited
Partnership, an affiliate of the Partnership.
On May 10, 1996, the Partnership sold the Taco Cabana
restaurant in New Braunfels, Texas to an unrelated third party.
The Partnership received net sale proceeds of $962,298, which
resulted in a net gain of $254,305. At the time of sale, the
cost and related accumulated depreciation of the property was
$784,045 and $76,052, respectively.
Through December 31, 1996, the Partnership sold 30.7627%
of the Applebee's restaurant in Destin, Florida in three separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $471,191 which resulted in a
total net gain of $161,208. The total cost and related
accumulated depreciation of the interests sold was $344,167 and
$34,184, respectively. For the year ended December 31, 1996, the
net gain was $124,583.
On March 10, 1997, the Partnership sold an additional
15.6446% interest in the Applebee's restaurant in Destin, Florida
to an unrelated third party. The Partnership received net sale
proceeds of approximately $225,000 which resulted in a net gain
of approximately $71,000.
Through December 31, 1996, the Partnership sold 37.6757%
of a Taco Cabana restaurant in San Antonio, Texas in three
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $607,835 which
resulted in a total net gain of $206,757. The total cost and
related accumulated depreciation of the interests sold was
$433,992 and $32,914, respectively. For the year ended December
31, 1996, the net gain was $206,757.
On February 28, 1997, the Partnership sold an additional
11.5896% interest in the Taco Cabana restaurant in San Antonio,
Texas to an unrelated third party. The Partnership received net
sale proceeds of approximately $187,000 which resulted in a net
gain of approximately $64,000.
Through December 31, 1996, the Partnership sold 18.3278%
of the Tractor Supply Company in Bristol, Virginia in two
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $271,085 which
resulted in a total net gain of $37,784. The total cost and
related accumulated depreciation of the interests sold was
$235,969 and $2,668, respectively. For the year ended December
31, 1996, the net gain was $37,784.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Subsequent to December 31, 1996, the Partnership sold an
additional 14.4585% interest in the Tractor Supply Company in
Bristol, Virginia in two separate transactions to unrelated third
parties. The Partnership received net sale proceeds of
approximately $218,000 which resulted in a net gain of
approximately $36,000.
On March 10, 1997, the Partnership sold a 7.0899% interest
in the Champps Americana restaurant in Columbus, Ohio to an
unrelated third party. The Partnership received net sale
proceeds of approximately $214,000 which resulted in a net gain
of approximately $34,000.
Pursuant to the Partnership Agreement, net sale proceeds
may be reinvested in additional properties until a date five
years after the date on which the offer and sale of Units is
terminated. This period expired on December 4, 1995. In
December, 1996, the Managing General Partner filed a proxy
statement to propose an Amendment to the Limited Partnership
Agreement that would allow the Partnership to reinvest the
majority of the sale proceeds from the Taco Cabana restaurants,
Tractor Supply Company and subsequent property sales in
additional properties. The Amendment passed with a majority of
Units voting in favor of the Amendment.
Major Tenants
During 1996, three of the Partnership's lessees each
contributed more than ten percent of the Partnership's total
rental revenue. The major tenants in aggregate contributed 68%
of the Partnership's total rental revenue in 1996. 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 1997 and future years. In addition, four business concepts,
Children's World Learning Centers, Taco Cabana, Applebee's and
Cheddar's restaurants, each accounted for more than ten percent
of the Partnership's total rental revenue during 1996. It is
anticipated that these business concepts will continue to account
for more than ten percent of the Partnership's total rental
revenue in 1996 and future years. Any failure of these major
tenants or business concepts 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.
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 and Canada 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 aggregate purchase price of all
Partnership properties.
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, 1996.
<TABLE>
<C> <S> <S> <S> <S> <S>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
Children's World Children's World
Daycare Center Learning
Phoenix, AZ 9/29/89 $ 883,486 Centers, Inc. $110,563 $14.62
Sizzler Restaurant
Cincinnati, OH
(4.1022%) 1/30/90 $ 66,093 (F2)
Pasta Fair Restaurant Pasta Fair of
Belleview, FL 4/11/90 $ 932,862 Belleview, Inc. $ 60,000 $ 9.84
Children's World Children's World
Daycare Center Learning
Blue Springs, MO 6/27/90 $ 791,271 Centers, Inc. $ 93,923 $11.74
Sizzler Restaurant
Springboro, OH
(93.2478%) 8/24/90 $1,310,561 (F1)
Children's World Children's World
Daycare Center Learning
Lenexa, KS 9/13/90 $ 983,527 Centers, Inc. $117,425 $14.65
Taco Cabana Restaurant Texas Taco
San Antonio, TX 12/29/90 $1,406,426 Cabana L.P. $191,076 $69.79
Cheddar's Restaurant Heartland
Clive, IA 1/22/91 $1,392,248 Restaurant Corp. $194,978 $27.08
Sizzler Restaurant
Fairfield, OH 3/29/91 $1,608,265 (F1)
Children's World Children's World
Daycare Center Learning
Westerville, OH 6/21/91 $ 990,261 Centers Inc. $116,194 $14.56
Taco Cabana Restaurant
San Antonio, TX Texas Taco
(62.3243%) 7/19/91 $ 717,924 Cabana L.P. $ 99,657 $35.73
Taco Cabana Restaurant Red Line
Brownsville, TX 8/9/91 $ 799,938 Taco One, Ltd. $113,769 $42.14
Applebee's Restaurant
Destin, FL
(69.2373%) 11/1/91 $ 774,613 T.S.S.O., Inc. $ 99,311 $29.81
Children's World Children's World
Daycare Center Learning
Columbus, OH 8/10/92 $1,019,202 Centers Inc. $110,454 $12.50
Rally's Restaurant Red Line San
San Antonio, TX 12/7/92 $ 303,640 Antonio One, LTD $ 15,000 $25.51
Rally's Restaurant Red Line San
San Antonio, TX 12/7/92 $ 308,997 Antonio One, LTD $ 15,000 $25.51
Applebee's Restaurant Southland Restaurant
Slidell, LA Development
(27%) 5/5/93 $ 280,018 Company, L.L.C. $ 39,769 $32.15
HomeTown Buffet Restaurant
Tucson, AZ JB's
(24%) 6/16/93 $ 303,733 Restaurants, Inc. $ 40,957 $17.75
Tractor Supply Company Store
Bristol, Virginia Tractor Supply
(66.6722%) 4/10/96 $ 858,399 Company $ 91,526 $ 8.87
Champps Restaurant Americana
Columbus, Ohio Dining
(32.20%) 8/29/96 $ 826,070 Corporation $ 90,834 $34.53
<F1> The property is vacant and listed for sale.
<F2> Property held for sale was sold on January 23, 1997.
</TABLE>
The properties listed above with a partial ownership
percentage are owned with affiliates of the Partnership and/or
unrelated third parties. AEI Real Estate Fund 86-A Limited
Partnership owns the remaining interest in the Sizzler restaurant
in Springboro, Ohio. AEI Real Estate Funds XVI and XVII Limited
Partnerships own the remaining interests in the Sizzler
restaurant in Cincinnati, Ohio. AEI Real Estate Fund XVI Limited
Partnership owns the remaining interest in the Applebee's
restaurant in Slidell, Louisiana. AEI Net Lease Income & Growth
Fund XIX Limited Partnership and AEI Institutional Net Lease Fund
'93 own the remaining interests in the HomeTown Buffet restaurant
in Tucson, Arizona. AEI Income & Growth Fund XXI Limited
Partnership owns the remaining interest in the Champps restaurant
in Columbus, Ohio. The Individual General Partner of the
Partnership and unrelated third parties own the remaining
interests in the Tractor Supply Company in Bristol, Virginia.
The remaining interests in the Taco Cabana in San Antonio, Texas
and the Applebee's in Destin, Florida are owned by unrelated
third parties.
For properties owned with affiliates, 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 restaurants located in San Antonio and New Braunfels,
Texas, the Rally's restaurants, and the Children's World daycare
centers, which have Lease terms of 15 years and the Tractor
Supply Company, which has a lease term of 14 years. The Leases
have renewal options which may extend the Lease term an
additional 10 years, except for the Champps, Slidell Applebee's
and the Rally's restaurants which have renewal options that may
extend the Lease term an additional 15 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.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
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 or 39 years depending on the date when it was
placed in service. 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.
During the last five years, or since the date of purchase
if purchased after December 31, 1991, all properties were 100
percent occupied by the lessees noted, with the exception of the
three Sizzler properties, which were 100 percent occupied until
January, 1994 for the Cincinnati location, June, 1994 for the
Springboro location and December, 1994 for the Fairfield
location, and have been vacant since those dates.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In December, 1996, the Managing General Partner solicited
by mail a proxy statement to propose an Amendment to the Limited
Partnership Agreement that would allow the Partnership to
reinvest the majority of net sale proceeds in additional
properties. In order for the proposed Amendment to be adopted, a
majority of the Units must be voted in favor of the Amendment.
Of the 21,764 outstanding Units, 11,510 voted for the Amendment,
5,677 voted against the Amendment and 727 abstained. As a
result, the Amendment was adopted.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS.
As of December 31, 1996, there were 1,619 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. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1996, fifteen Limited Partners redeemed a total of
313.42 Partnership Units for $233,227 in accordance with the
Partnership Agreement. In prior years, a total of forty-six
Limited Partners redeemed 705 Partnership Units for $602,632 in
accordance with the Partnership Agreement. The redemptions
increase the remaining Limited Partners' ownership interest in
the Partnership.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS. (Continued)
Cash distributions of $15,703 and $19,212 were made to the
General Partners and $1,321,421 and $1,782,761 were made to the
Limited Partners in 1996 and 1995, 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 $368,643 and $684,111 of
proceeds from property sales in 1996 and 1995, respectively. The
distributions reduced the Limited Partners' Adjusted Capital
Contributions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
For the years ended December 31, 1996 and 1995, the
Partnership recognized rental income of $1,621,285 and
$1,802,007, respectively. During the same periods, the
Partnership earned investment income of $103,442 and $55,768,
respectively. In 1996, rental income decreased mainly as a
result of the property sales and Rally's situation discussed
below. The decrease in rental income was partially offset by
rental income received from two subsequent property acquisitions,
rent increases on eleven properties and additional investment
income earned on the net proceeds from the property sales.
The Partnership owns a 4.1022% interest in a Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a Sizzler
restaurant in Springboro, Ohio, and a 100% interest in a Sizzler
restaurant in Fairfield, Ohio. In November, 1993, after
reviewing the lessee's operating results, the Partnership
determined that the lessee would be unable to operate the
restaurants 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 and June, 1994, the Partnership closed the
restaurants in Cincinnati and Springboro, respectively, and
listed them for sale or lease. While the properties are vacant,
the Partnership is responsible for the real estate taxes and
other costs required to maintain the properties. At December 31,
1996, these properties were classified on the balance sheet as
Real Estate Held for Sale.
On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. Fairfield was not able
to profitably operate the restaurant and closed the restaurant.
The Partnership is reviewing the available options, which include
selling or re-leasing the property.
No rents were collected from the Sizzler restaurants in
1996 and 1995. The total amount of rent not collected in 1996
and 1995 was $396,541 and $384,991, respectively, for the three
properties. These amounts were not accrued for financial
reporting purposes.
On January 23, 1997, the Partnership sold its interest in
the Cincinnati restaurant to an unrelated third party. The
Partnership received net sales proceeds of approximately $19,900,
which resulted in a net loss of approximately $31,700, which was
recognized as a real estate impairment in 1996.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
In December, 1996, the Partnership, in order to avoid
additional property management expenses, decided to sell the
Sizzler properties in Springboro and Fairfield rather than to
continue to attempt to re-lease the properties. As a result, the
properties have been reclassified on the balance sheet to Real
Estate Held for Sale. In addition, based on an analysis of
market conditions in the area, it was determined that a sale of
the properties would result in net proceeds of approximately
$800,000. The Partnership's share of the proceeds would be
approximately $773,000. A charge to operations for real estate
impairment of $1,645,600 was recognized, which is the difference
between book value at December 31, 1996 of $2,427,600 and the
estimated market value of $773,000. The charge was recorded
against the cost of the land, building and equipment.
In August, 1995, the lessee of the two Rally's properties
filed for reorganization. After reviewing the operating results
of the lessee, the Partnership agreed to amend the Leases of the
two properties. Effective December 1, 1995, the Partnership
amended the Leases to reduce the base rent from the current
annual rent of $47,498 and $48,392 to $15,000 for each property.
The Partnership could receive additional rent in the future equal
to 6.75% of the amount by which gross receipts exceed $275,000.
In 1997, the Leases, as amended, were confirmed as part of the
reorganization plan. The lessee has agreed to pay all post-
petition rents due and the Partnership's related administrative
and legal expenses. The Partnership is owed $29,128 of pre-
petition rent, which was not accrued for financial reporting
purposes due to the uncertainty of collection.
In February, 1996, the Partnership called a letter of
credit for $109,393 related to the Taco Cabana restaurant in
Brownsville, Texas. The Partnership applied the funds to satisfy
rents and real estate taxes due. In 1997, the Partnership took
possession of the property and has listed it for sale or re-
lease. While the property is being sold or re-leased, the
Partnership has assumed the responsibilities for real estate
taxes and other costs required to maintain the property.
During the years ended December 31, 1996 and 1995, the
Partnership paid Partnership administration expenses to
affiliated parties of $247,414 and $251,309, 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 $190,019 and $81,777, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs. The increase
in these expenses in 1996, when compared to 1995, is the result
of expenses incurred in 1996 related to the Sizzler situation
discussed above.
As of December 31, 1996, the Partnership's annualized cash
distribution rate was 6.0%, 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
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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Liquidity and Capital Resources
During 1996, the Partnership's cash balances increased
$26,952. Net income before depreciation, real estate impairment
and gain on sale decreased by approximately $224,000 in 1996,
when compared to the same period in 1995. This was due to a
decrease in revenues as a result of the property sales discussed
below and an increase in expenses in 1996. This decrease was
partially offset by net timing differences in the collection of
payments from the lessees and the payment of expenses so that net
cash provided by operating activities decreased by only $46,256
from 1995 to 1996.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. In 1996 and 1995, the Partnership
generated cash flow from the sale of real estate, as discussed
below, of $2,201,332 and $2,704,142, respectively. During the
same periods, the Partnership expended $1,911,639 and $8,798,
respectively, to invest in real properties (inclusive of
acquisition expenses) as the Partnership reinvested the cash
generated from the property sales.
On July 6, 1995, the Partnership sold the Cheddar's
restaurant in Columbus, Ohio, to the lessee. The Partnership
received net sale proceeds of $1,259,320, which resulted in a net
gain of $105,291. At the time of sale, the cost and related
accumulated depreciation was $1,306,191 and $152,162,
respectively.
On September 1, 1995, the Partnership sold the Applebee's
restaurant in Memphis, Tennessee, to the lessee. The Partnership
received net sale proceeds of $1,444,822, which resulted in a net
gain of $465,562. At the time of sale, the cost and related
accumulated depreciation was $1,126,919 and $147,659,
respectively.
The Partnership used the majority of the proceeds from the
two property sales in 1995 to purchase two properties in 1996, as
discussed below. The remainder of the proceeds from these sales
were distributed to the Partners in 1995 and 1996.
On April 10, 1996, the Partnership purchased an 85.0%
interest in a Tractor Supply Company in Bristol, Virginia
for $1,094,367. The property is leased to Tractor Supply Company
under a Lease Agreement with a primary term of 14 years and
annual rental payments of $116,686. The remaining interest in
the property was purchased by the Individual General Partner of
the Partnership.
On August 29, 1996, the Partnership purchased a 32.2%
interest in a Champps Americana restaurant in Columbus, Ohio for
$826,070. The property is leased to Americana Dining Corporation
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $90,834. The remaining interest in the
property was purchased by AEI Income & Growth Fund XXI Limited
Partnership, an affiliate of the Partnership.
On May 10, 1996, the Partnership sold the Taco Cabana
restaurant in New Braunfels, Texas to an unrelated third party.
The Partnership received net sale proceeds of $962,298, which
resulted in a net gain of $254,305. At the time of sale, the
cost and related accumulated depreciation of the property was
$784,045 and $76,052, respectively.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Through December 31, 1996, the Partnership sold 30.7627%
of the Applebee's restaurant in Destin, Florida in three separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $471,191 which resulted in a
total net gain of $161,208. The total cost and related
accumulated depreciation of the interests sold was $344,167 and
$34,184, respectively. For the year ended December 31, 1996, the
net gain was $124,583.
On March 10, 1997, the Partnership sold an additional
15.6446% interest in the Applebee's restaurant in Destin, Florida
to an unrelated third party. The Partnership received net sale
proceeds of approximately $225,000 which resulted in a net gain
of approximately $71,000.
Through December 31, 1996, the Partnership sold 37.6757%
of a Taco Cabana restaurant in San Antonio, Texas in three
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $607,835 which
resulted in a total net gain of $206,757. The total cost and
related accumulated depreciation of the interests sold was
$433,992 and $32,914, respectively. For the year ended December
31, 1996, the net gain was $206,757.
On February 28, 1997, the Partnership sold an additional
11.5896% interest in the Taco Cabana restaurant in San Antonio,
Texas to an unrelated third party. The Partnership received net
sale proceeds of approximately $187,000 which resulted in a net
gain of approximately $64,000.
Through December 31, 1996, the Partnership sold 18.3278%
of the Tractor Supply Company in Bristol, Virginia in two
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $271,085 which
resulted in a total net gain of $37,784. The total cost and
related accumulated depreciation of the interests sold was
$235,969 and $2,668, respectively. For the year ended December
31, 1996, the net gain was $37,784.
Subsequent to December 31, 1996, the Partnership sold an
additional 14.4585% interest in the Tractor Supply Company in
Bristol, Virginia in two separate transactions to unrelated third
parties. The Partnership received net sale proceeds of
approximately $218,000 which resulted in a net gain of
approximately $36,000.
On March 10, 1997, the Partnership sold a 7.0899% interest
in the Champps Americana restaurant in Columbus, Ohio to an
unrelated third party. The Partnership received net sale
proceeds of approximately $214,000 which resulted in a net gain
of approximately $34,000.
Pursuant to the Partnership Agreement, net sale proceeds
may be reinvested in additional properties until a date five
years after the date on which the offer and sale of Units is
terminated. This period expired on December 4, 1995. In
December, 1996, the Managing General Partner filed a proxy
statement to propose an Amendment to the Limited Partnership
Agreement that would allow the Partnership to reinvest the
majority of the sale proceeds from the Taco Cabana restaurants,
Tractor Supply Company and subsequent property sales in
additional properties. The Amendment passed with a majority of
Units voting in favor of the Amendment.
During 1996 and 1995, the Partnership distributed $372,366
and $691,021 of the net sale proceeds to the Limited and General
Partners as part of their regular quarterly distributions, which
represented a return of capital of $16.85 and $30.90 per Limited
Partnership Unit, respectively.
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. The redemption payments generally are funded with cash
that would normally be paid as part of the regular quarterly
distributions. As a result, total distributions and
distributions payable have fluctuated from year to year due to
cash used to fund redemption payments. In 1995, the Partnership
made distributions at an 8.0% rate which resulted in
distributions of $1,800,768. Effective January 1, 1996, the
distribution rate was reduced to 6.0% which resulted in
distributions of $1,334,769 for 1996.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1996, fifteen Limited Partners redeemed a total of
313.42 Partnership Units for $233,227 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
forty-six Limited Partners redeemed 705 Partnership Units for
$602,632. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
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 $300,000.
The line of credit bears interest at the prime rate 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. In January, 1996, the line of credit
expired. In 1995, interest expense related to the line of credit
was $6,115.
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 XVIII LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet as of December 31, 1996 and 1995
Statements for the Years Ended December 31, 1996 and 1995:
Operations
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Partners:
AEI Real Estate Fund XVIII Limited Partnership
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI REAL
ESTATE FUND XVIII LIMITED PARTNERSHIP (a Minnesota limited
partnership) as of December 31, 1996 and 1995 and the related
statements of operations, 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 XVIII Limited Partnership as of December
31, 1996 and 1995 and the results of its operations and its cash
flows for the years then ended, in conformity with generally
accepted accounting principles.
Minneapolis, Minnesota /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 31, 1997 Certified Public Accountants
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,359,926 $ 2,332,974
Receivables 12,870 43,389
----------- -----------
Total Current Assets 2,372,796 2,376,363
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,374,569 5,370,160
Buildings and Equipment 9,198,045 11,065,109
Property Acquisition Costs 0 8,798
Accumulated Depreciation (1,706,567) (1,932,655)
----------- -----------
11,866,047 14,511,412
Real Estate Held for Sale 792,877 0
----------- -----------
Net Investments in Real Estate 12,658,924 14,511,412
----------- -----------
Total Assets $15,031,720 $16,887,775
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 121,697 $ 49,968
Distributions Payable 323,784 406,381
Security Deposit 665 0
Unearned Rent 5,000 5,000
----------- -----------
Total Current Liabilities 451,146 461,349
----------- -----------
MINORITY INTEREST 0 76,319
PARTNERS' CAPITAL (DEFICIT):
General Partners (49,658) (29,971)
Limited Partners, $1,000 Unit Value;
30,000 Units authorized; 22,783 Issued;
21,764 and 22,078 outstanding in 1996
and 1995, respectively 14,630,232 16,380,078
----------- -----------
Total Partners' Capital 14,580,574 16,350,107
----------- -----------
Total Liabilities and Partners' Capital $15,031,720 $16,887,775
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 3l
1996 1995
INCOME:
Rent $ 1,621,285 $ 1,802,007
Investment Income 103,442 55,768
----------- -----------
Total Income 1,724,727 1,857,775
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 247,414 251,309
Partnership Administration and Property
Management - Unrelated Parties 190,019 81,777
Interest 0 6,115
Depreciation 423,605 445,648
Real Estate Impairment 1,686,300 0
----------- -----------
Total Expenses 2,547,338 784,849
----------- -----------
OPERATING INCOME (LOSS) (822,611) 1,072,926
GAIN ON SALE OF REAL ESTATE 623,429 570,853
MINORITY INTEREST IN OPERATING INCOME 0 (7,760)
----------- -----------
NET INCOME (LOSS) $ (199,182) $ 1,636,019
=========== ===========
NET INCOME (LOSS) ALLOCATED:
General Partners $ (3,984) $ 16,360
Limited Partners (195,198) 1,619,659
----------- -----------
$ (199,182) $ 1,636,019
=========== ===========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
(21,999 and 22,194 weighted average Units outstanding
in 1996 and 1995, respectively) $ (8.87) $ 72.98
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 3l
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (199,182) $ 1,636,019
Adjustments To Reconcile Net Income (Loss)
To Net Cash Provided By Operating Activities:
Depreciation 423,605 445,648
Real Estate Impairment 1,686,300 0
Gain on Sale of Real Estate (623,429) (570,853)
(Increase) Decrease in Receivables 30,519 (23,162)
Increase in Payable to AEI Fund Management, Inc. 71,729 535
Increase (Decrease) in Security Deposit 665 (50,000)
Minority Interest 0 (1,724)
----------- -----------
Total Adjustments 1,589,389 (199,556)
----------- -----------
Net Cash Provided By
Operating Activities 1,390,207 1,436,463
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,911,639) (8,798)
Proceeds from Sale of Real Estate 2,201,332 2,704,142
----------- -----------
Net Cash Provided By
Investing Activities 289,693 2,695,344
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable (82,597) 18,906
Distributions to Partners (1,334,769) (1,800,768)
Redemption Payments (235,582) (120,440)
----------- -----------
Net Cash Used For
Financing Activities (1,652,948) (1,902,302)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 26,952 2,229,505
CASH AND CASH EQUIVALENTS, beginning of period 2,332,974 103,469
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,359,926 $ 2,332,974
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid During the Year $ 0 $ 6,115
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Reclassification of minority interest and
investments in real estate due to use of
the proportionate consolidation method $ 76,319 $ 0
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 3l
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (27,119) $16,662,415 $16,635,296 22,233.80
Distributions (18,007) (1,782,761) (1,800,768)
Redemption Payments (1,205) (119,235) (120,440) (156.00)
Net Income 16,360 1,619,659 1,636,019
--------- ----------- ----------- ----------
BALANCE, December 31, 1995 (29,971) 16,380,078 16,350,107 22,077.80
Distributions (13,348) (1,321,421) (1,334,769)
Redemption Payments (2,355) (233,227) (235,582) (313.42)
Net Loss (3,984) (195,198) (199,182)
--------- ----------- ----------- ----------
BALANCE, December 31, 1996 $ (49,658) $14,630,232 $14,580,574 21,764.38
========= =========== =========== ==========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) Organization -
AEI Real Estate Fund XVIII Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVIII, 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 15, 1989 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated December 4, 1990 when the extended offering
period expired. The Partnership received subscriptions for
22,783.05 Limited Partnership Units ($22,783,050).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$22,783,050, 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 XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(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 XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(2) Summary of Significant Accounting Policies - (Continued)
The Partnership regularly assesses whether market events
and conditions indicate that it is reasonably possible to
recover the carrying amounts of its investments in real
estate from future operations and sales. A change in
those market events and conditions could have a material
effect on the carrying amount of its real estate
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 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. This
standard requires the Partnership to compare the carrying
amount of its properties to the estimated future cash
flows expected to result from the property and its
eventual disposition. If the sum of the expected future
cash flows is less than the carrying amount of the
property, the Statement requires the Partnership to
recognize an impairment loss by the amount by which the
carrying amount of the property exceeds the fair value of
the property. Adoption of this Statement required a
recognition of an impairment loss of $1,686,300 on three
properties in 1996.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(2) Summary of Significant Accounting Policies - (Continued)
The Partnership has capitalized as Investments in Real
Estate certain costs incurred in the review and
acquisition of the properties. The costs were allocated
to the land, buildings and equipment.
The buildings and equipment of the Partnership are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 30
years and 10 years, respectively.
During the fourth quarter of 1996, as a result of changes
in certain agreements, the Partnership began accounting
for properties owned as tenants-in-common with unrelated
third parties using the proportionate consolidation
method. Each tenant-in-common owns a separate, undivided
interest in the properties. Any tenant-in-common that
holds more than a 50% interest does not control decisions
over the other tenant-in-common interests. The 1996
financial statements reflect only this Partnership's
percentage share of the property's land, building and
equipment, liabilities, revenues and expenses.
In fiscal 1995, for properties owned as tenants-in-common
with unrelated third parties, other than affiliated
partnerships, the Partnership accounted for its interest
under the full consolidation method whereby the unrelated
third parties' interests in the properties were reflected
in the Partnership's financial statements as a minority
interest. For purposes of financial reporting, the
Partnership consolidated properties in which it was the
controlling tenant-in-common despite having only a
minority equity interest in the property.
In both fiscal 1996 and 1995, properties owned in
conjunction with related Partnerships were accounted for
using the proportionate consolidation method.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(3) Related Party Transactions -
On January 30, 1990, the Partnership acquired a 4.1022%
interest in the Sizzler restaurant in Cincinnati, Ohio. On
June 7, 1990, the Partnership acquired an 80% interest in
the Cheddar's restaurant in Columbus, Ohio. On August 24,
1990, the Partnership acquired a 93.2478% interest in the
Sizzler restaurant in Springboro, Ohio. On May 5, 1993, the
Partnership acquired a 27% interest in the Applebee's
restaurant in Slidell, Louisiana. On June 16, 1993, the
Partnership acquired a 24% interest in the HomeTown Buffet
restaurant in Tucson, Arizona. On April 10, 1996, the
Partnership acquired an 85.0% interest in the Tractor Supply
Company in Bristol, Virginia. On August 29, 1996, the
Partnership acquired a 32.2% interest in a Champps Americana
restaurant in Columbus, Ohio. The remaining interests in
these properties are owned by affiliates of the Partnership
and/or unrelated third parties. AEI Real Estate Funds XVI
and XVII Limited Partnerships own the remaining interests in
the Sizzler restaurant in Cincinnati, Ohio. AEI Real Estate
Fund 86-A Limited Partnership owns the remaining interests
in the Cheddar's restaurant and the Sizzler restaurant in
Springboro, Ohio. AEI Real Estate Fund XVI Limited
Partnership owns the remaining interest in the Applebee's
restaurant in Slidell, Louisiana. AEI Net Lease Income &
Growth Fund XIX Limited Partnership and AEI Institutional
Net Lease Fund '93 own the remaining interests in the
HomeTown Buffet restaurant in Tucson, Arizona. The
Individual General Partner of the Partnership and unrelated
third parties own the remaining interests in the Tractor
Supply Company in Bristol, Virginia. AEI Income & Growth
Fund XXI Limited Partnership owns the remaining interest in
the Champps restaurant in Columbus, Ohio.
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
1996 1995
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. $ 247,414 $ 251,309
======== ========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(3) Related Party Transactions - (Continued)
Total Incurred by the Partnership
for the Years Ended December 31
1996 1995
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. $ 190,019 $ 81,777
======== ========
c.AEI is reimbursed for all property acquisition
costs incurred by it in acquiring properties on
behalf of the Partnership. The amounts are net
of financing and commitment fees and expense
reimbursements received by the Partnership from
the lessees in the amount of $55,529 and $8,000
for 1996 and 1995, respectively. $ (33,667) $ 8,798
======== ========
The payable to AEI Fund Management, Inc. represents the
balance due for the services described in 3a, b and c. This
balance is non-interest bearing and unsecured and is to be
paid in the normal course of business.
(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 restaurants in San Antonio and
New Braunfels, Texas, the Rally's restaurants, and the
Children's World daycare centers, which have Lease terms of
15 years and the Tractor Supply Company which has a Lease
term of 14 years. The Leases have renewal options which may
extend the Lease term an additional 10 years, except for the
Champps, Slidell Applebee's and the Rally's restaurants
which have renewal options that may extend the Lease term an
additional 15 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 XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
The Partnership's properties are all commercial, single-
tenant buildings. The Taco Cabana restaurant purchased on
July 19, 1991 was originally constructed in 1984 and was
renovated in 1991. The Children's World daycare center in
Phoenix was constructed in 1988 and the HomeTown Buffet
restaurant in Tucson was constructed in 1993. All other
properties were constructed in 1989, 1990, 1991 or 1992.
The Tractor Supply Company and Champps restaurant were
constructed and acquired in 1996. The Partnership acquired
the Phoenix Children's World daycare center in 1989. The
Partnership acquired its interest in the Slidell Applebee's
restaurant and the Tucson HomeTown Buffet restaurant in
1993. All other properties were acquired in 1990, 1991 and
1992. There have been no costs capitalized as improvements
subsequent to the acquisitions.
For those properties in the table below which do not have
land costs, the lessee has entered into long-term land
leases with unrelated third parties. The cost of the
properties not held for sale and related accumulated
depreciation at December 31, 1996 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Children's World, Phoenix, AZ $ 259,467 $ 624,019 $ 883,486 $ 175,109
Pasta Fair Restaurant,
Belleview, FL 251,593 681,269 932,862 152,339
Children's World,
Blue Springs, MO 162,290 628,981 791,271 153,115
Children's World, Lenexa, KS 185,788 797,739 983,527 185,785
Taco Cabana, San Antonio, TX 871,844 534,582 1,406,426 119,328
Cheddar's, Clive, IA 379,249 1,012,999 1,392,248 233,340
Children's World,
Westerville, OH 157,848 832,413 990,261 169,203
Taco Cabana, San Antonio, TX 405,771 312,153 717,924 56,195
Taco Cabana, Brownsville, TX 361,652 438,286 799,938 79,135
Applebee's, Destin, FL 359,188 415,425 774,613 87,582
Children's World,
Columbus, OH 157,569 861,633 1,019,202 138,199
Rally's, San Antonio, TX 0 303,640 303,640 48,696
Rally's, San Antonio, TX 0 308,997 308,997 49,214
Applebee's, Slidell, LA 104,613 175,405 280,018 21,438
HomeTown Buffet,
Tucson, AZ 163,688 140,045 303,733 16,533
Tractor Supply Company,
Bristol, VA 275,816 582,583 858,399 14,889
Champps, Columbus, OH 278,193 547,877 826,070 6,468
----------- ----------- ----------- ----------
$ 4,374,569 $ 9,198,046 $13,572,615 $ 1,706,568
=========== =========== =========== ==========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
The Partnership owns a 4.1022% interest in a Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a
Sizzler restaurant in Springboro, Ohio, and a 100% interest
in a Sizzler restaurant in Fairfield, Ohio. In November,
1993, after reviewing the lessee's operating results, the
Partnership determined that the lessee would be unable to
operate the restaurants 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 and June, 1994, the
Partnership closed the restaurants in Cincinnati and
Springboro, respectively, and listed them for sale or lease.
While the properties are vacant, the Partnership is
responsible for the real estate taxes and other costs
required to maintain the properties. At December 31, 1996,
these properties were classified on the balance sheet as
Real Estate Held for Sale.
On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. Fairfield was not
able to profitably operate the restaurant and closed the
restaurant. The Partnership is reviewing the available
options, which include selling or re-leasing the property.
No rents were collected from the Sizzler restaurants in 1996
and 1995. The total amount of rent not collected in 1996
and 1995 was $396,541 and $384,991, respectively, for the
three properties. These amounts were not accrued for
financial reporting purposes.
On January 23, 1997, the Partnership sold its interest in
the Cincinnati restaurant to an unrelated third party. The
Partnership received net sales proceeds of approximately
$19,900, which resulted in a net loss of approximately
$31,700, which was recognized as a real estate impairment in
1996.
In December, 1996, the Partnership, in order to avoid
additional property management expenses, decided to sell the
Sizzler properties in Springboro and Fairfield rather than
to continue to attempt to re-lease the properties. As a
result, the properties have been reclassified on the balance
sheet to Real Estate Held for Sale. In addition, based on
an analysis of market conditions in the area, it was
determined that a sale of the properties would result in net
proceeds of approximately $800,000. The Partnership's share
of the proceeds would be approximately $773,000. A charge
to operations for real estate impairment of $1,645,600 was
recognized, which is the difference between book value at
December 31, 1996 of $2,427,600 and the estimated market
value of $773,000. The charge was recorded against the cost
of the land, building and equipment.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
In August, 1995, the lessee of the two Rally's properties
filed for reorganization. After reviewing the operating
results of the lessee, the Partnership agreed to amend the
Leases of the two properties. Effective December 1, 1995,
the Partnership amended the Leases to reduce the base rent
from the current annual rent of $47,498 and $48,392 to
$15,000 for each property. The Partnership could receive
additional rent in the future equal to 6.75% of the amount
by which gross receipts exceed $275,000. In 1997, the
Leases, as amended, were confirmed as part of the
reorganization plan. The lessee has agreed to pay all post-
petition rents due and the Partnership's related
administrative and legal expenses. The Partnership is owed
$29,128 of pre-petition rent, which was not accrued for
financial reporting purposes due to the uncertainty of
collection.
In February, 1996, the Partnership called a letter of credit
for $109,393 related to the Taco Cabana restaurant in
Brownsville, Texas. The Partnership applied the funds to
satisfy rents and real estate taxes due. In 1997, the
Partnership took possession of the property and has listed
it for sale or re-lease. While the property is being sold
or re-leased, the Partnership has assumed the
responsibilities for real estate taxes and other costs
required to maintain the property.
On July 6, 1995, the Partnership sold the Cheddar's
restaurant in Columbus, Ohio, to the lessee. The
Partnership received net sale proceeds of $1,259,320, which
resulted in a net gain of $105,291. At the time of sale,
the cost and related accumulated depreciation was $1,306,191
and $152,162, respectively.
On September 1, 1995, the Partnership sold the Applebee's
restaurant in Memphis, Tennessee, to the lessee. The
Partnership received net sale proceeds of $1,444,822, which
resulted in a net gain of $465,562. At the time of sale,
the cost and related accumulated depreciation was $1,126,919
and $147,659, respectively.
The Partnership used the majority of the proceeds from the
two property sales in 1995 to purchase two properties in
1996, as discussed below. The remainder of the proceeds
from these sales were distributed to the Partners in 1995
and 1996.
On April 10, 1996, the Partnership purchased an 85.0%
interest in a Tractor Supply Company in Bristol, Virginia
for $1,094,367. The property is leased to Tractor Supply
Company under a Lease Agreement with a primary term of 14
years and annual rental payments of $116,686.
On August 29, 1996, the Partnership purchased a 32.2%
interest in a Champps Americana restaurant in Columbus, Ohio
for $826,070. The property is leased to Americana Dining
Corporation under a Lease Agreement with a primary term of
20 years and annual rental payments of $90,834.
On May 10, 1996, the Partnership sold the Taco Cabana
restaurant in New Braunfels, Texas to an unrelated third
party. The Partnership received net sale proceeds of
$962,298, which resulted in a net gain of $254,305. At the
time of sale, the cost and related accumulated depreciation
of the property was $784,045 and $76,052, respectively.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
Through December 31, 1996, the Partnership sold 30.7627% of
the Applebee's restaurant in Destin, Florida in three
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $471,191
which resulted in a total net gain of $161,208. The total
cost and related accumulated depreciation of the interests
sold was $344,167 and $34,184, respectively. For the year
ended December 31, 1996, the net gain was $124,583.
On March 10, 1997, the Partnership sold an additional
15.6446% interest in the Applebee's restaurant in Destin,
Florida to an unrelated third party. The Partnership
received net sale proceeds of approximately $225,000 which
resulted in a net gain of approximately $71,000.
Through December 31, 1996, the Partnership sold 37.6757% of
a Taco Cabana restaurant in San Antonio, Texas in three
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $607,835
which resulted in a total net gain of $206,757. The total
cost and related accumulated depreciation of the interests
sold was $433,992 and $32,914, respectively. For the year
ended December 31, 1996, the net gain was $206,757.
On February 28, 1997, the Partnership sold an additional
11.5896% interest in the Taco Cabana restaurant in San
Antonio, Texas to an unrelated third party. The Partnership
received net sale proceeds of approximately $187,000 which
resulted in a net gain of approximately $64,000.
Through December 31, 1996, the Partnership sold 18.3278% of
the Tractor Supply Company in Bristol, Virginia in two
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $271,085
which resulted in a total net gain of $37,784. The total
cost and related accumulated depreciation of the interests
sold was $235,969 and $2,668, respectively. For the year
ended December 31, 1996, the net gain was $37,784.
Subsequent to December 31, 1996, the Partnership sold an
additional 14.4585% interest in the Tractor Supply Company
in Bristol, Virginia in two separate transactions to
unrelated third parties. The Partnership received net sale
proceeds of approximately $218,000 which resulted in a net
gain of approximately $36,000.
On March 10, 1997, the Partnership sold a 7.0899% interest
in the Champps Americana restaurant in Columbus, Ohio to an
unrelated third party. The Partnership received net sale
proceeds of approximately $214,000 which resulted in a net
gain of approximately $34,000.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
Pursuant to the Partnership Agreement, net sale proceeds may
be reinvested in additional properties until a date five
years after the date on which the offer and sale of Units is
terminated. This period expired on December 4, 1995. In
December, 1996, the Managing General Partner filed a proxy
statement to propose an Amendment to the Limited Partnership
Agreement that would allow the Partnership to reinvest the
majority of the sale proceeds from the Taco Cabana
restaurants, Tractor Supply Company and subsequent property
sales in additional properties. The Amendment passed with a
majority of Units voting in favor of the Amendment.
During 1996 and 1995, the Partnership distributed $372,366
and $691,021 of the net sale proceeds to the Limited and
General Partners as part of their regular quarterly
distributions, which represented a return of capital of
$16.85 and $30.90 per Limited Partnership Unit,
respectively.
The Partnership's share of the minimum future rentals on the
non-cancelable Leases for years subsequent to December 31,
1996 are as follows:
1997 $ 1,610,416
1998 1,628,734
1999 1,650,139
2000 1,672,231
2001 1,693,200
Thereafter 13,286,425
------------
$ 21,541,145
============
The Partnership recognized contingent rents of $12,429 and
$10,372 in 1996 and 1995, respectively.
(5) Security Deposit -
In February, 1996, the Partnership called a letter of credit
for $109,393 related to the Taco Cabana restaurant in
Brownsville, Texas. The Partnership applied the funds to
satisfy rents and real estate taxes due. As of December 31,
1996, the Partnership was holding $665 as a security
deposit.
(6) 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 $300,000. The line of credit bears interest at
the prime rate 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. In January, 1996, the line of credit expired. In
1995, interest expense related to the line of credit was
$6,115.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(7) 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:
1996 1995
Tenants Industry
Children's World
Learning Centers, Inc. Child Care $ 540,763 $ 529,191
Heartland Restaurant Corp. Restaurant 194,353 269,763
Texas Taco Cabana L.P. Restaurant 372,481 444,049
----------- -----------
Aggregate rent revenue of major tenants $ 1,107,597 $ 1,243,003
=========== ===========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 68% 69%
=========== ===========
(8) Partners' Capital -
Cash distributions of $15,703 and $19,212 were made to the
General Partners and $1,321,421 and $1,782,761 were made to
the Limited Partners for the years ended December 31, 1996
and 1995, respectively. The Limited Partners' distributions
represent $60.07 and $80.33 per Limited Partnership Unit
outstanding using 21,999 and 22,194 weighted average Units
in 1996 and 1995, respectively. The distributions represent
$-0- and $67.58 per Unit of Net Income, and $60.07 and
$12.75 per Unit of return of contributed capital in 1996 and
1995, respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $368,643 and $684,111 of
proceeds from property sales in 1996 and 1995, respectively.
The distributions reduced the Limited Partners' Adjusted
Capital Contributions.
Distributions of Net Cash Flow to the General Partners
during 1996 and 1995 were subordinated to the Limited
Partners as required in the Partnership Agreement. As a
result, 99% of distributions were allocated to the Limited
Partners and 1% to the General Partners.
The Partnership may acquire Units from Limited Partners who
have tendered their Units to the Partnership. Such Units
may be acquired at a discount. The Partnership is not
obligated to purchase in any year more than 5% of the number
of Units outstanding at the beginning of the year. In no
event shall the Partnership be obligated to purchase Units
if, in the sole discretion of the Managing General Partner,
such purchase would impair the capital or operation of the
Partnership.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(8) Partners' Capital - (Continued)
During 1996, fifteen Limited Partners redeemed a total of
313.42 Partnership Units for $233,227 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1995, ten Limited
Partners redeemed a total of 156 Partnership Units for
$119,235. 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
$993.38 per original $1,000 invested.
(9) Income Taxes -
The following is a reconciliation of net income (loss) for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
1996 1995
Net Income (Loss) for Financial
Reporting Purposes $ (199,182) $ 1,636,019
Depreciation for Tax Purposes
Under Depreciation for Financial
Reporting Purposes 60,603 46,707
Amortization of Start-Up and
Organization Costs (31,354) (72,344)
Income Accrued for Tax Purposes
Over Income for Financial
Reporting Purposes 17,207 0
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 5,209 0
Gain on Sale of Real Estate for
Tax Purposes Over (Under) Gain for
Financial Reporting Purposes 1,686,929 (25,318)
----------- -----------
Taxable Income to Partners $ 1,539,412 $ 1,585,064
=========== ===========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(9) 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:
1996 1995
Partners' Capital for
Financial Reporting Purposes $14,580,574 $16,350,107
Adjusted Tax Basis of Investments
in Real Estate Over (Under) Net
Investments in Real Estate
for Financial Reporting Purposes 1,708,198 (39,334)
Capitalized Start-Up Costs
Under Section 195 397,387 419,267
Amortization of Start-Up and
Organization Costs (392,406) (381,473)
Income Accrued for Tax Purposes Over
Income for Financial
Reporting Purposes 22,207 5,000
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 6,668 0
Organization and Syndication Costs
Treated as Reduction of Capital
for Financial Reporting Purposes 3,342,442 3,342,442
----------- -----------
Partners' Capital for
Tax Reporting Purposes $19,665,070 $19,696,009
=========== ===========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(10) 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:
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash $ 127 $ 127 $ 2,940 $ 2,940
Money Market Funds 1,364,257 1,364,257 1,339,592 1,339,592
Commercial Paper
(held to maturity) 995,542 995,542 0 0
Federal Agency Notes
(held to maturity) 0 0 990,442 990,442
---------- ---------- ---------- ----------
Total Cash and
Cash Equivalents $2,359,926 $2,359,926 $2,332,974 $2,332,974
========== ========== ========== ==========
The amortized cost basis of the commercial paper and federal
agency notes is not materially different from its carrying
amount or fair value.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The registrant is a limited partnership and has no
officers, directors, or direct employees. The General Partners
of the registrant are Robert P. Johnson and 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:
Robert P. Johnson, age 52, is Chief Executive Officer,
President and Director and has held these positions since the
formation of AFM in September, 1988, and has been elected to
continue in these positions until September, 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 44, is Executive Vice President,
Treasurer and Chief Financial Officer and has been elected to
continue in these position until September, 1995. Mr. Larson has
been executive Vice President and Treasurer since the formation
of AFM in September, 1988 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 September,
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. During 1990, AFM purchased twenty Limited Partnership
Units (less than 1% of the Units outstanding) from certain
Limited Partners. As of December 31, 1996, Mr. Johnson owned
twenty-six 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 for the period from
inception through December 31, 1996.
Person or Entity Amount Incurred From Inception
Receiving Form and Method (September 20, 1988) to
Compensation of Compensation December 31, 1996
AEI Incorporated Selling Commissions equal to 7% $ 2,278,305
of proceeds plus a 3% nonaccountable
expense allowance, most of which was
reallowed to Participating Dealers.
General Partners Reimbursement at Cost for other $ 1,064,137
and Affiliates Organization and Offering Costs.
General Partners Reimbursement at Cost for all $ 472,342
and Affiliates Acquisition Expenses
General Partners 1% of Net Cash Flow in any fiscal year $ 115,957
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 $ 1,994,391
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 Inception
Receiving Form and Method (September 20, 1988) to
Compensation of Compensation December 31, 1996
General Partners 15% of distributions of Net Proceeds $ 11,745
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 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, 1996, the cumulative reimbursements to the General
Partners and their affiliates did not exceed those 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 September 26, 1988
[File No. 33-24419]).
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 September 26, 1988
[File No. 33-24419]).
10.1 Net Lease Agreement dated
September 28, 1989 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
4120 E. Ranch Circle Drive, Phoenix,
Arizona (incorporated by reference to
Exhibit 10.2 of Post-Effective Amendment
No. 1 to the registrant's Registration
Statement on Form S-11 filed with the
Commission on April 14, 1990 [File No. 33-
24419]).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.2 Net Lease Agreement dated
June 26, 1990 between the Partnership and
Children's World Learning Centers, Inc.
relating to the property at 2100 North
Highway 7, Blue Springs, Missouri
(incorporated by reference to Exhibit
10.6 of Form 10-K filed with the
Commission on July 27, 1992).
10.3 Net Lease Agreement dated
September 13, 1990 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
8555 Monrovia Street, Lenexa, Kansas
(incorporated by reference to Exhibit
10.8 of Form 10-K filed with the
Commission on July 27, 1992).
10.4 Net Lease Agreement dated
December 29, 1990 between the Partnership
and Taco Cabana, Inc. relating to the
property at 7339 San Pedro Avenue, San
Antonio, Texas (incorporated by reference
to Exhibit 10.9 of Form 10-K filed with
the Commission on July 27, 1992).
10.5 Net Lease Agreement dated
January 22, 1991 between the Partnership
and Heartland Restaurant Corporation
relating to the property at 1301 N.W.
114th Street, Clive, Iowa (incorporated
by reference to Exhibit 10.10 of Form 10-
K filed with the Commission on July 27,
1992).
10.6 Net Lease Agreement dated
June 20, 1991 between the Partnership and
Children's World Learning Centers, Inc.
relating to the property at 1231 Sunbury
Road, Westerville, Ohio (incorporated by
reference to Exhibit 10.12 of Form 10-K
filed with the Commission on July 27,
1992).
10.7 Net Lease Agreement dated
July 19, 1991 between the Partnership and
Taco Cabana, Inc. relating to the
property at 6867 Highway 90 West, San
Antonio, Texas (incorporated by reference
to Exhibit 10.13 of Form 10-K filed with
the Commission on July 27, 1992).
10.8 Net Lease Agreement dated
August 9, 1991 between the Partnership
and Red Line Taco One, Ltd. relating to
the property at 54 South Expressway,
Brownsville, Texas (incorporated by
reference to Exhibit 10.14 of Form 10-K
filed with the Commission on July 27,
1992).
10.9 Net Lease Agreement dated
October 31, 1991 between the Partnership
and T.S.S.O., Inc. relating to the
property at 5701 Emerald Coast Parkway,
Destin, Florida (incorporated by
reference to Exhibit 10.15 of Form 10-K
filed with the Commission on July 27,
1992).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.10 Net Lease Agreement
dated December 10, 1991 between the
Partnership and Pasta Fair of Belleview,
Inc. relating to the property at 10401
Highway 441, Belleview, Florida
(incorporated by reference to Exhibit
10.16 of Form 10-K filed with the
Commission on July 27, 1992).
10.11 Net Lease Agreement
dated July 28, 1992 between the
Partnership and Children's World Learning
Centers, Inc. relating to the property at
4885 Cherry Bottom Road, Columbus, Ohio
(incorporated by reference to Exhibit
10.17 of Form 10-K filed with the
Commission on March 29, 1993).
10.12 Net Lease Agreement
dated December 7, 1992 between the
Partnership and Red Line San Antonio One,
Ltd. relating to the property at 529 Fair
Avenue, San Antonio, Texas (incorporated
by reference to Exhibit 10.19 of Form 10-
K filed with the Commission on March 29,
1993).
10.13 Net Lease Agreement
dated December 7, 1992 between the
Partnership and Red Line San Antonio One,
Ltd. relating to the property at 4606
Rittiman Road, San Antonio, Texas
(incorporated by reference to Exhibit
10.20 of Form 10-K filed with the
Commission on March 29, 1993).
10.14 Net Lease Agreement
dated May 5, 1993 between the Partnership
and GC Slidell, Inc. relating to the
property at 850 I-10 Service Road,
Slidell, Louisiana (incorporated by
reference to Exhibit 10.22 of Form 10-K
filed with the Commission on March 29,
1994).
10.15 Net Lease Agreement
dated June 16, 1993 between the
Partnership and JB's Restaurants, Inc.
relating to the property at 330 South
Wilmot Road, Tucson, Arizona
(incorporated by reference to Exhibit
10.23 of Form 10-K filed with the
Commission on March 29, 1994).
10.16 Purchase Agreement
dated May 24, 1994 between the
Partnership and Nicoletta Trust relating
to the property at 5701 Emerald Coast
Parkway, Destin, Florida (incorporated by
reference to Exhibit 10.23 of Form 10-KSB
filed with the Commission on March 30,
1995).
10.17 Co-tenancy Agreement
dated June 17, 1994 between the
Partnership and Nicoletta Trust relating
to the property at 5701 Emerald Coast
Parkway, Destin, Florida (incorporated by
reference to Exhibit 10.24 of Form 10-KSB
filed with the Commission on March 30,
1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.18 Sale and Leaseback
Financing Commitment Agreement dated
September 21, 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 Old Airport Road and I-81,
Bristol, Virginia (incorporated by
reference to Exhibit 10.1 of Form 10-QSB
filed with the Commission on November 2,
1995).
10.19 Sale and Leaseback
Financing Commitment dated September 5,
1995 between AEI Fund Management, Inc.
and Americana Dining Corporation relating
to the property at 161 E. Campus View
Boulevard, Columbus, Ohio (incorporated
by reference to Exhibit 10.24 of Form 10-
KSB filed with the Commission on March
21, 1996).
10.20 Amendment to Sale and
Leaseback Financing Commitment dated
November 30, 1995 between AEI Fund
Management, Inc., Americana Dining
Corporation, AEI Income & Growth Fund XXI
Limited Partnership and the Partnership
relating to the property at 161 E. Campus
View Boulevard, Columbus, Ohio
(incorporated by reference to Exhibit
10.25 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.21 Amendment of Lease
dated January 25, 1996 between the
Partnership, AEI Net Lease Income &
Growth Fund XIX Limited Partnership, Red
Line San Antonio One, Ltd. and Red Line
Burgers, Inc. relating to the properties
at 529 Fair Avenue, and 4606 Rittiman
Road, San Antonio, Texas (incorporated by
reference to Exhibit 10.26 of Form 10-KSB
filed with the Commission on March 21,
1996).
10.22 Net Lease Agreement
dated April 10, 1996 between the
Partnership, Robert P. Johnson and
Tractor Supply Company relating to the
property at Old Airport Road and I-81,
Bristol, Virginia (incorporated by
reference to Exhibit 10.2 of Form 8-K
filed with the Commission on April 17,
1996).
10.23 Purchase Agreement
dated May 3, 1996 between the Partnership
and the Givens Family Trust relating to
the property at 811 I-H North, New
Braunfels, Texas (incorporated by
reference to Exhibit 10.1 of Form 8-K
filed with the Commission on May 21,
1996).
10.24 Net Lease Agreement
dated August 29, 1996 between the
Partnership, AEI Income & Growth Fund XXI
Limited Partnership and Americana Dining
Corporation relating to the property at
161 E. Campus View Boulevard, Columbus,
Ohio (incorporated by reference to
Exhibit 10.3 of Form 8-K filed with the
Commission on September 12, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.25 Purchase Agreement
dated July 23, 1996 between the
Partnership and Carolyn W. Davidson
relating to the property at 6867 Highway
90 West, San Antonio, Texas (incorporated
by reference to Exhibit 10.1 of Form 10-
QSB filed with the Commission on November
14, 1996).
10.26 Property Co-Tenancy
Ownership Agreement dated August 5, 1996
between the Partnership and Carolyn W.
Davidson relating to the property at 6867
Highway 90 West, San Antonio, Texas
(incorporated by reference to Exhibit
10.2 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.27 Purchase Agreement
dated August 23, 1996 between the
Partnership, Robert P. Johnson, and Joyce
R. Scott relating to the property at Old
Airport Road and I-81, Bristol, Virginia
(incorporated by reference to Exhibit
10.3 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.28 Property Co-Tenancy
Ownership Agreement dated September 12,
1996 between the Partnership, Robert P.
Johnson, and Joyce R. Scott relating to
the property at Old Airport Road and I-
81, Bristol, Virginia (incorporated by
reference to Exhibit 10.4 of Form 10-QSB
filed with the Commission on November 14,
1996).
10.29 Purchase Agreement
dated October 9, 1996 between the
Partnership, Robert P. Johnson, and Arel
D. and Louise B. Middleton relating to
the property at Old Airport Road and I-
81, Bristol, Virginia (incorporated by
reference to Exhibit 10.5 of Form 10-QSB
filed with the Commission on November 14,
1996).
10.30 Purchase Agreement
dated October 9, 1996 between the
Partnership and Arel D. and Louise B.
Middleton relating to the property at
6867 Highway 90 West, San Antonio, Texas
(incorporated by reference to Exhibit
10.6 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.31 Property Co-Tenancy
Ownership Agreement dated October 15,
1996 between the Partnership, Robert P.
Johnson, and Arel D. and Louise B.
Middleton relating to the property at Old
Airport Road and I-81, Bristol, Virginia
(incorporated by reference to Exhibit
10.7 of Form 10-QSB filed with the
Commission on November 14, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.32 Property Co-Tenancy
Ownership Agreement dated October 15,
1996 between the Partnership and Arel D.
and Louise B. Middleton relating to the
property at 6867 Highway 90 West, San
Antonio, Texas (incorporated by reference
to Exhibit 10.8 of Form 10-QSB filed with
the Commission on November 14, 1996).
10.33 Purchase Agreement
dated December 6, 1996 between the
Partnership and the Hesson Family Living
Trust relating to the property at 6867
Highway 90 West, San Antonio, Texas.
10.34 Property Co-Tenancy
Ownership Agreement dated December 16,
1996 between the Partnership and the
Hesson Family Living Trust relating to
the property at 6867 Highway 90 West, San
Antonio, Texas.
10.35 Purchase Agreement
dated December 23, 1996 bwtween the
Partnership and John Pasini and Elvia
Pasini relating to the property at 5701
Emerald Coast Parkway, Destin, Florida.
10.36 Purchase Agreement
dated December 23, 1996 between the
Partnership and Kent T. Wood and Kimberly
Pasini Wood relating to the property at
5701 Emerald Coast Parkway, Destin,
Florida.
10.37 Purchase Agreement
dated December 26, 1996 between the
Partnership and William E. Mason and
Hazel Mason relating to the property at
Old Airport Road and I-81, Bristol,
Virginia.
10.38 Property Co-Tenancy
Agreement dated December 30, 1996 between
the Partnership and John Pasini and Elvia
Pasini relating to the property at 5701
Emerald Coast Parkway, Destin, Florida.
10.39 Property Co-Tenancy
Agreement dated December 30, 1996 between
the Partnership and Kent T. Wood and
Kimberly Pasini Wood relating to the
property at 5701 Emerald Coast Parkway,
Destin, Florida.
10.40 Property Co-Tenancy
Agreement dated January 2, 1997 between
the Partnership and William E. Mason and
Hazel Mason relating to the property at
Old Airport Road and I-81, Bristol,
Virginia.
10.41 Purchase Agreement
dated February 14, 1997 between the
Partnership and Anton Kuster, Jr.
relating to the property at 6867 Highway
90 West, San Antonio, Texas.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.
(3) Exhibits - (Continued)
Description
10.42 Property Co-Tenancy
Ownership Agreement dated February 28,
1997 between the Partnership and Anton
Kuster, Jr. relating to the property at
6867 Highway 90 West, San Antonio, Texas.
27 Financial Data Schedule
for year ended December 31, 1996.
B. Reports on Form 8-K and Form 8-K/A - None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AEI REAL ESTATE FUND XVIII
Limited Partnership
By: AEI Fund Management XVIII, Inc.
Its Managing General Partner
March 17, 1997 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 17, 1997
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E. Larson Executive Vice President, Treasurer March 17, 1997
Mark E. Larson and Chief Financial Officer
(Principal Accounting Officer)
PURCHASE AGREEMENT
Taco Cabana, San Antonio, TX
This AGREEMENT, entered into effective as of the 6 of Dec, 1996 .
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership ("Seller"), Seller presently holds an undivided 100%
interest in the fee title to that certain real property legally
described in the attached Exhibit "A". (the "Entire Property")
Buyer is the Hesson Family Living Trust ("Buyer"). Seller wishes
to sell and Buyer wishes to buy a portion as Tenant in Common of
Seller's interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 13.2895% percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property. To the best of Seller's knowledge, the purchase
of the Property is the purchase of an interest in real property
under Texas law.
3. Purchase Price . The purchase price for this percentage
interest in the Property is $250,050 all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise dispersed
pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$245,050 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the Closing Date.
(c) Seller hereby acknowledges receipt of the sum of $50.00
cash (the "Option Consideration") from Buyer, as
consideration for execution of this Agreement by Seller. If
the purchase and sale of the Property is consummated
pursuant to this Agreement, the Option Consideration shall
be applied toward the purchase price paid by Buyer. If this
Agreement is terminated pursuant to a default by Seller
hereunder, the Option Consideration shall be immediately
returned by Seller to Buyer. If this Agreement is
terminated for any reason other than a default by Seller
hereunder, Seller shall be entitled to retain the Option
Consideration.
5 Closing Date. Escrow shall close on or before December 16,
1996.
6 . Due Diligence. Buyer will have until the expiration of the
fifth business day after delivery of each of following items, to
be supplied by Seller, to conduct all of its inspections and due
diligence and satisfy itself regarding each item, the Property,
and this transaction. Buyer agrees to indemnify and hold Seller
harmless for any loss or damage to the Leased Premises or persons
caused by Buyer or its agents arising out of such physical
inspections of the Entire Property. (The "Review Period")
Buyer Initial: /s/ IDH /s/ ICH
Purchase Ageement for Taco Cabana - San Antonio, TX
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) copies of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
Closing Date be delivered to the Seller on the Closing Date.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
any Review Period. Such notice shall be deemed effective only
upon receipt by Seller. If this Agreement is not canceled as set
forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property. If this Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the commitment of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
the close of escrow, in an amount equal to the purchase price,
insuring that Buyer will own insurable title to the Property
subject only to: the title company's standard exceptions;
current real property taxes and assessments; survey exceptions;
the rights of parties in possession pursuant to the lease defined
in paragraph 11 below; and other items of record disclosed to
Buyer during the Review Period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The buyer will pay the cost of issuing a Standard Owners Title
Insurance Policy in the full amount of the purchase price. Buyer
will pay all recording fees, one-half of the escrow fees, and the
cost of an update to the Survey in Sellers possession (if an
update is required by buyer.) Each party will pay its own
attorney's fees and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests, pro-rated, however,
to the date of closing; for the period prior to closing,
such taxes and asessments shall be the responsibility of
Seller, if Tenant shall not pay the same. Seller and Buyer
shall likewise pay in proportion to their ownership
interests all taxes due and payable in the year after
Closing and any unpaid installments of special assessments
payable therewith and thereafter, if such unpaid levied and
pending special assessments and real estate taxes are not
paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
Closing, and Buyer shall be entitled to its proportionate
share of all income earned and shall be responsible for its
proportionate share of all operating expenses of the
Property incurred on and after the date of closing, if the
same are not paid by any tenant of the Entire Property.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between Seller and
Taco Cabana, Inc. ("lessee"), dated July 19, 1991 which was
assigned to Texas Taco Cabana LP pursuant to the General
Assignment and Assumption of Leases between Taco Cabana,
Inc. and TC Lease Holdings III, V and VI, Inc. dated October
31, 1993 and pursuant to the General Assignment and
Assumption of Leases between TC Lease Holding III V and VI,
Inc. and Texas Taco Cabana LP dated October 31, 1993 and
pursuant to the Consents and Acknowledgments Concerning Net
Lease Agreements between Taco Cabana, Inc. and AEI Real
Estate Fund XVIII Limited Partnership dated June 2, 1994,
Seller is not aware of any leases of the Property. A copy
of the above referenced documents is incorporated herein as
"Exhibit "B". The above referenced lease agreement has an
option to purchase in favor of the Tenant as set forth in
article 34 of said lease agreement.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the Closing Date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prior to the Closing Date that would materially
affect the Property and be binding on Buyer after the
Closing Date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Lessee and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property. This provision shall survive closing.
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
13. Closing.
(a) Before the Closing Date, Seller will deposit into
escrow an executed special warranty deed conveying insurable
title of the Property to Buyer, subject to the encumbrances
contained in paragraph 8 above.
(b) On or before the Closing Date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign the Co-
Tenancy Agreement, and deliver to the escrow holder any
other documents reasonably required by the escrow holder to
close escrow.
(c) On the Closing Date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
owners title policy purchase by buyer; immediately deliver
to Seller the portion of the purchase price deposited into
escrow by cashier's check or wire transfer (less debits and
prorations, if any); deliver to Seller and Buyer a signed
counterpart of the escrow holder's certified closing
statement and take all other actions necessary to close
escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the second payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any five-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to Fidelity National Title
who will act as Facilitator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Fidelity National Title will be an independent third party
purchasing the ownership interest in subject property from Seller
and selling the ownership interest in subject property to Buyer
under the same terms and conditions as documented in this
Purchase Agreement. Buyer asks the Seller to cooperate in the
perfection of such an exchange at no additional cost or expense
or delay in time. Buyer hereby indemnifies and holds Seller
harmless from any claims and/or actions resulting from said
exchange. Pursuant to the direction of Fidelity National Title,
Seller will deed the Property to Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
canceled unless the breach is cured within 13 days following
the delivery of the notice to the escrow agent. Within
three days after receipt of such notice, the escrow agent
shall send it by United States Mail to the party in breach
at the address contained in the Notice and no further notice
shall be required. If the breach is not cured within the 13
days following the delivery of the notice to the escrow
agent, this Contract shall be canceled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
other matters described, and it supersedes any other
agreements or understandings. Exhibits attached to this
Agreement are incorporated into this Agreement.
(b) If this escrow has not closed by December 16, 1996
through no fault of Seller, Seller may either, at its
election, extend the Closing Date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Ivan Hesson, Trustee
3864 Via Lasbrisas
Santa Barbera, CA 93110
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: Hesson Family Living Trust
By: /s/ Ivan D. Hesson, Trustee
Ivan D. Hesson, Trustee
By: /s/ Irene C Hesson, Trustee
Irene C. Hesson, Trustee
SELLER: AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP, a
Minnesota limited partnership.
By: AEI Fund Management XVIII, Inc., its corporate general
partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Buyer Initial: /s/ IDH /s/ ICH
Purchase Agreement for Taco Cabana - San Antonio, TX
EXHIBIT A
Legal Description
Lot 31, Block 1, New City Block 15600. CKE Subdivion, Unit
3, an addition to the City of San Antonio, Bexar County,
Texas, according to the map or plat thereof, recorded in
Volume 9504, Page 182, Deed and Plat Records of Bexar
County, Texas.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Taco Cabana - San Antonio, TX)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 16th day of Dec, 1996, by and
between The Hesson Family Living Trust (hereinafter called
"Hesson"), and AEI Real Estate Fund XVIII Limited Partnership
(hereinafter called "Fund XVIII") (Hesson, Fund XVIII (and any
other Owner in Fee where the context so indicates) being
hereinafter sometimes collectively called "Co-Tenants" and
referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XVIII presently owns an undivided 62.3243% interest
in and to, and Hesson presently owns an undivided 13.2895%
interest in and to, and Arel D. and Louise B. Middleton presently
owns and undivided 10.6316% interest (also referred to herein as
Co-Tenant) in and to, and Carolyn W. Davidson presently owns an
undivided 13.7546% interest (also referred to herein as Co-
Tenant) in and to the land, situated in the City of San Antonio,
County of Bexar, and State of Texas, (legally described upon
Exhibit A attached hereto and hereby made a part hereof) and in
and to the improvements located thereon (hereinafter called
"Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Hesson's interest by
Fund XVIII; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Hesson of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XVIII, or its designated agent, successors or
assigns. Provided, however, if Fund XVIII shall sell all of its
interest in the Premises, the duties and obligations of Fund
XVIII respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XVIII with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XVIII as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of all present or future Co-
Tenants. Only Fund XVIII may obligate any Co-Tenant with respect
to any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XVIII agrees to
require any lessee of the Premises to name Hesson as an insured
or additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XVIII shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from lessee within 30 days of commencement of this
agreement. In any event, Fund XVIII shall distribute any
insurance proceeds it
Co-Tenant Inital: /s/ IDH /s/ ICH
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
may receive, to the extent consistent with any lease on the
Premises, to the Co-Tenants in proportion to their respective
ownership of the Premises.
2. Income, expenses and any net proceeds from a sale of the
Premises shall be allocated among the Co-Tenants in proportion to
their respective share(s) of ownership. Shares of net income
shall be pro-rated for any partial calendar years included within
the term of this Agreement. Fund XVIII may offset against, pay to
itself and deduct from any payment due to Hesson under this
Agreement, and may pay to itself the amount of Hesson's share of
any legitimate expenses of the Premises which are not paid by
Hesson to Fund XVIII or its assigns, within ten (10) days after
demand by Fund XVIII. In the event there is insufficient
operating income from which to deduct Hesson's unpaid share of
operating expenses, Fund XVIII may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Lessee under terms of any triple net lease agreement initiated
concurrently with, or subsequent to, this agreement.
Hesson has elected to retain, and agrees to annually reimburse,
Fund XVIII in the amount of $720 for the expenses, direct and
indirect, incurred by Fund XVIII in providing quarterly
accounting and distributions of Hesson's share of net income and
for tracking, reporting and assessing the calculation of Hesson's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Hesson
authorizes Fund XVIII to deduct such amount from Hesson's share
of revenue from the Premises. Hesson may terminate this agreement
at any time and collect it's share of rental stream directly from
the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XVIII's principal office, and each Co-Tenant shall have
access to such books and may inspect and copy any part thereof
during normal business hours. Within ninety (90) days after the
end of each calendar year during the term hereof, Fund XVIII
shall prepare an accurate income statement for the ownership of
the Premises for said calendar year and shall furnish copies of
the same to all Co-Tenants. Quarterly, as its share, Hesson shall
be entitled to receive 13.2895% of all items of income and
expense generated by the Premises, and Fund XVIII shall be
entitled to receive 62.3243% as its share. Upon receipt of said
accounting, if the payments received by each Co-Tenant pursuant
to this Paragraph 3 do not equal, in the aggregate, the amounts
which each are entitled to receive with respect to said calendar
year pursuant to Paragraph 2 hereof, an appropriate adjustment
shall be made so that each Co-Tenant receives the amount to which
it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XVIII, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XVIII sufficient to pay said net operating losses
and to provide necessary operating capital for the premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Subject to the rights of any Tenant under a lease of the
Premises, Co-Tenants may, at any time, sell, finance, or
otherwise create a lien upon their interest in the Premises but
only upon their interest and not upon any part of the interest
held, or owned, by any other Co-Tenant. All Co-Tenants reserve
Co-Tenant Initial: /s/ IDH /s/ ICH
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
the right to escrow proceeds from a sale of their interests in
the Premises to obtain tax deferral by the purchase of
replacement property.
6. If any Co-Tenant, including Co-Tenant Arel D. and Louise B.
Middleton which currently owns an undivided 10.6316% interest in
the property subject to a co-tenancy agreement with Fund XVIII
dated October 15, 1996 and including Co-Tenant Carolyn W.
Davidson which currently owns an undivided 13.7546% interest in
the Property subject to a co-tenancy agreement with Fund XVIII
dated August 5, 1996, shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until the
expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises in accordance with the terms
hereof and proper disbursement of the proceeds thereof, whichever
shall first occur. Unless specifically identified as a personal
contract right or obligation herein, this agreement shall run
with any interest in the Premises and with the title thereto.
Once any person, party or entity has ceased to have an interest
in fee in the Premises, it shall not be bound by, subject to or
benefit from the terms hereof; but its heirs, executors,
administrators, personal representatives, successors or assigns,
as the case may be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XVIII:
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Davidson:
Carolyn W. Davidson
4407 Ortega Forest Drive
Jacksonville, FL 32210
If to Middleton:
Arel D. and Louise B. Middleton
P.O. Box 283
Wasco, OR 97065-0283
If to Hesson:
Ivan Hesson, Trustee
3864 Via Lasbrisas
Santa Barbera, CA 93110
Co-Tenant Initial: /s/ IDH /s/ ICH
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
10. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
11. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
12. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Hesson The Hesson Family Living Trust
By: /s/ Ivan D Hesson, Trustee
Ivan D. Hesson, Trustee
By: /s/ Irene C. Hesson, Trustee
Irene C. Hesson, Trustee
Witness By: /s/ C Horwald
STATE OF CALIFORNIA )
) ss
COUNTY OF SANTA BARBARA )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 6 day of December, 1996, by C Horwald, Notary Public.
[notary seal]
Co-Tenant Initial: /s/ IDH /s/ ICH
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
Fund XVIII AEI Real Estate Fund XVIII Limited Partnership
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Witness By: /s/ Laura Steidl
Witness By: /s/ Rona Newtson
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 16th day of
December, 1996, Robert P. Johnson, President of AEI Fund
Management XVIII, Inc., corporate general partner of AEI Real
Estate Fund XVIII Limited Partnership, who executed the foregoing
instrument in said capacity and on behalf of the corporation in
its capacity as corporate general partner, on behalf of said
limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ IDH /s/ ICH
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
Exhibit A
Legal Description
Lot 31, Block 1, New City Block 15600, CKE Subdivion, Unit 3, an
addition to the City of San Antonio, Bexar County, Texas,
according to the map or plat thereof, recorded in Volume 9504,
Page 182, Deed and Plat Records of Bexar County, Texas.
PURCHASE AGREEMENT
Applebee's Restaurant - Destin, FL
This AGREEMENT, entered into effective as of the 23 of Dec, 1996.
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership which owns an undivided 92.9409% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Entire Property") Buyer is John
Pasini and Elvia Pasini, Trustees of the John Pasini and Elvia
Pasini Trust dated June 11, 1987 ("Buyer"). Seller wishes to sell
and Buyer wishes to buy a portion as Tenant in Common of Seller's
interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 12.6222 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Entire Property is $213,000, all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise disbursed
pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$208,000 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5. Closing Date. Escrow shall close on or before December 30,
1996.
6. Due Diligence. Buyer will have until the expiration of the
fifth business day (The "Review Period") after delivery of each
of following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Leased Premises or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) originals of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
the Review Period. Such notice shall be deemed effective only
upon receipt by Seller. If this Agreement is not cancelled as
set forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property unless Buyer makes
the Second Payment when required. If this Agreement is not
canceled and the Second Payment is made when required, all of
Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties.. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the Lease defined in paragraph 11 below;
and other items of record disclosed to Buyer during the
contingency period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The Buyer will pay the cost of issuing a standard Owners Title
Insurance Policy in the full amount of the purchase price, if
Buyer shall decide to purchase the same. Buyer will pay all
recording fees, one-half of the escrow fees, and the cost of an
update to the Survey in Sellers possession (if an update is
required by Buyer.) Each party will pay its own attorney's fees
and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and thereafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between AEI Real
Estate Fund XVIII Limited Partnership and T.S.S.O.,
Inc.("Tenant"), dated October 31, 1991 (as amended by letter
agreement dated September 21, 1995 between AEI and Tenant),
Seller is not aware of any leases of the Property. The
above referenced lease agreement has an option to purchase
in favor of the Tenant as set forth in article 35 of said
lease agreement.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prior to the closing Date that would materially
affect the Property and be binding on Buyer after the
closing date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Tenant and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Tenant and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
The provisions (d) - (f) above shall survive closing.
13. Closing.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
(a) Before the closing date, Seller will deposit into
escrow an executed limited warranty deed conveying insurable
title of the Property to Buyer, subject to the encumbrances
contained in paragraph 8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign the Co-
Tenancy Agreement, and deliver to the escrow holder any
other documents reasonably required by the escrow holder to
close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the Second Payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any ten-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to North American Real Estate
Services who will act as Facilitator to perfect the 1031 exchange
by preparing an agreement of exchange of Real Property whereby
North American Real Estate Services will be an independent third
party purchasing the ownership interest in subject property from
Seller and selling the ownership interest in subject property to
Buyer under the same terms and conditions as documented in this
Purchase Agreement. Buyer asks the Seller, and Seller agrees to
cooperate in the perfection of such an exchange if at no
additional cost or expense to Seller or delay in time. Buyer
hereby indemnifies and holds Seller harmless from any claims
and/or actions resulting from said exchange. Pursuant to the
direction of North American Real Estate Services, Seller will
deed the Property to Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
cancelled unless the breach is cured within 13 days
following the delivery of the notice to the escrow agent.
Within three days after receipt of such notice, the escrow
agent shall send it by United States Mail to the party in
breach at the address contained in the Notice and no further
notice shall be required. If the breach is not cured within
the 13 days following the delivery of the notice to the
escrow agent, this Contract shall be cancelled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed by December 30, 1996
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
John Pasini and Elvia Pasini, Trustees
4000 Bitter Creek Court
Reno, NV 89509
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: John Pasini and Elvia Pasini Trust
By: /s/ John Pasini, Tee
John Pasini, Trustee
By: /s/ Elvia Pasini, Tee
Elvia Pasini, Trustee
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
SELLER: AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP, a
Minnesota limited partnership.
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
Buyer Initial:
Purchase Agreement for Applebee's - Destin, FL
EXHIBIT A
Legal Description
Premises: APPLEBEE'S NEIGHBORHOOD GRILL & BAR
A portion of Section 26, Township 2 South. Range 21 West,
Walton County, Florida, being more particularly described as
follows:
Commence at the intersection with the East line of the
aforesaid Section 26 and the North Right-of-way Line of
State Road 30 (U.S. 98. 100' R/W); thence go North 77
degrees 09 minutes 03 seconds West along the aforesaid Right-
of-way line, a distance of 1233.51 feet to a point of
curvature: thence go along a curve to the left, having a
radius of 5779.65 feet, an arc distance of 1060.26 feet (CH.
= 1058.78', CH. BRG. = North 82 degrees 24 minutes 26
seconds West); thence departing the aforesaid North Right-of-
way line, go North 02 degrees 59 seconds 27 minutes East, a
distance of 10.00 feet to a point on a curve, being concave
southerly and having a radius of 5789.65 feet and the Point
of Beginning: thence go northwesterly along the aforesaid
curve, an arc distance of 180.00 feet (CH. = 179.99', CH.
BRG. = North 88 degrees 33 minutes 11 seconds West): thence
go North 02 degrees 59 minutes 27 seconds East, a distance
of 215.00 feet: thence go South 88 degrees 38 minutes 25
seconds East, a distance of 178.79 feet to a Point on a
curve, being concave southwesterly and having a radius of
44.90 feet: thence go Southeasterly along the aforesaid
curve, an arc distance of 10.44 feet (CHI. = 10.42'. CHI.
BRAG. = South 03 degrees 39 minutes 46 seconds East) to the
Point of Tangency: thence go South 02 degrees 59 minutes 27
seconds East, a distance of 204.89 feet to the Point of
Beginning.
EXCEPTING THEREFROM THAT PORTION
lying Northerly of and within 66 feet of the centerline of
survey of State Road 30 (US 98) Section 60020, Westerly of
Station 248+00 and lying Northerly of and within 67 feet of
said centerline of survey, between Station 248+00 and
Station 256+51 and lying Northerly of said centerline of
survey and within a transition from 67 feet at Station
256+51 to 87 feet at Station 256+76; and lying Northerly of
and within 110 feet of said centerline of survey, between
Station 256+76 and Station 257+36; and lying Northerly of
said centerline of survey and within a transition from 87
feet at Station 257+36 to 67 feet at Station 257+61; and
lying Northerly of and within 67 feet of said centerline of
survey Easterly of Station 257+611; said centerline to be
described and said Stations to be located as follows:
Commence on a capped rod (RLS # 1835) at the Southeast
corner of Sandestin Estates Subdivision, as per plat
recorded in Plat Book 4, Page 25 of the Public Records of
Walton County, Florida; thence South 44 16' 49" East 101.64
feet; thence North 83 48' 54" East 3476.74 feet (crossing
the East line of Section 27, Township 2 South, Range 21 West
and the West line of Section 26, Township 2 South 2 South,
Range 21 West) to the POINT OF BEGINNING of centerline of
survey to be described herein, said point being the
beginning of a curve, concave Southerly, having a radius of
5729.58 feet; thence run Northeasterly, Easterly and
Southeasterly 1302.52 feet along said curve, thru a central
angle of 13 o1' 31" to Station 248+00; thence continue
Southeasterly 695.62 feet along said curve, thru a central
angle of 6 57' 22" to the end of curve; thence South 76 12'
14" East 155.38 feet to Station 256+51; thence continue
South 76 12' 14" East 25.0 feet to Station 256+76; thence
continue South 76 12' 14" East 60.00 feet to Station 257+36;
thence continue South 76 12'14" East 25.0 feet to Station
257+61; thence continue South 76 12' 14" East 977.87 feet to
the East line of said Section 26 (West line of Section 25,
Township 2 South Range 21 West) at a point 4561.50 feet
South 1 50' 37" West of a four inch by four inch concrete
monument on the Northeast corner of said Section 26
(Northwest corner of said Section 25); thence continue South
76 12' 14" East 1359.55 feet to a point of intersection with
the Southerly extension of the Easterly line of Parcel A of
Tract 308 of said Section 25; and end of centerline of
survey herein described; said point being 518.40 feet South
2 00' 23" West of a capped rod (RLS # 2535) on the Northeast
corner of said partial A; containing 1080 square feet, more
or less.
PURCHASE AGREEMENT
Applebee's Restaurant - Destin, FL
This AGREEMENT, entered into effective as of the 23 of Dec, 1996.
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership which owns an undivided 92.9409% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Entire Property") Buyer is Kent
T.Wood and Kimberly Pasini Wood ("Buyer"). Seller wishes to sell
and Buyer wishes to buy a portion as Tenant in Common of Seller's
interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 11.0814 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Entire Property is $187,000, all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise disbursed
pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$182,000 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5. Closing Date. Escrow shall close on or before December 30,
1996.
6. Due Diligence. Buyer will have until the expiration of the
fifth business day (The "Review Period") after delivery of each
of following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Leased Premises or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such Tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) originals of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
the Review Period. Such notice shall be deemed effective only
upon receipt by Seller. If this Agreement is not cancelled as
set forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property unless Buyer makes
the Second Payment when required. If this Agreement is not
canceled and the Second Payment is made when required, all of
Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties.. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the Lease defined in paragraph 11 below;
and other items of record disclosed to Buyer during the
contingency period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The Buyer will pay the cost of issuing a standard Owners Title
Insurance Policy in the full amount of the purchase price, if
Buyer shall decide to purchase the same. Buyer will pay all
recording fees, one-half of the escrow fees, and the cost of an
update to the Survey in Sellers possession (if an update is
required by Buyer.) Each party will pay its own attorney's fees
and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and thereafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any Tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between AEI Real
Estate Fund XVIII Limited Partnership and T.S.S.O.,
Inc.("Tenant"), dated October 31, 1991 (as amended by letter
agreement dated September 21, 1995 between AEI and Tenant),
Seller is not aware of any leases of the Property. The
above referenced lease agreement has an option to purchase
in favor of the Tenant as set forth in article 35 of said
lease agreement.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prior to the closing Date that would materially
affect the Property and be binding on Buyer after the
closing date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Tenant and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Tenant and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, Tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
The provisions (d) - (f) above shall survive closing.
13. Closing.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
(a) Before the closing date, Seller will deposit into
escrow an executed limited warranty deed conveying insurable
title of the Property to Buyer, subject to the encumbrances
contained in paragraph 8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign the Co-
Tenancy Agreement, and deliver to the escrow holder any
other documents reasonably required by the escrow holder to
close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the Second Payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any ten-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to North American Real Estate
Services who will act as Facilitator to perfect the 1031 exchange
by preparing an agreement of exchange of Real Property whereby
North American Real Estate Services will be an independent third
party purchasing the ownership interest in subject property from
Seller and selling the ownership interest in subject property to
Buyer under the same terms and conditions as documented in this
Purchase Agreement. Buyer asks the Seller, and Seller agrees to
cooperate in the perfection of such an exchange if at no
additional cost or expense to Seller or delay in time. Buyer
hereby indemnifies and holds Seller harmless from any claims
and/or actions resulting from said exchange. Pursuant to the
direction of North American Real Estate Services, Seller will
deed the Property to Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
cancelled unless the breach is cured within 13 days
following the delivery of the notice to the escrow agent.
Within three days after receipt of such notice, the escrow
agent shall send it by United States Mail to the party in
breach at the address contained in the Notice and no further
notice shall be required. If the breach is not cured within
the 13 days following the delivery of the notice to the
escrow agent, this Contract shall be cancelled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed by December 30, 1996
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Kent T. Wood and Kimberly Pasini Wood
1550 Monte Vista Drive
Reno, NV 89509
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: KENT T. WOOD AND KIMBERLY PASINI WOOD
By: /s/ Kent T Wood
Kent T. Wood
By: /s Kimberly Pasini Wood
Kimberly Pasini Wood
SELLER: AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP, a
Minnesota limited partnership.
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Buyer Initial: /s/ KTW /s/ KPW
Purchase Ageement for Applebee's - Destin, FL
EXHIBIT A
Legal Description
Premises: APPLEBEE'S NEIGHBORHOOD GRILL & BAR
A portion of Section 26, Township 2 South. Range 21 West,
Walton County, Florida, being more particularly described as
follows:
Commence at the intersection with the East line of the
aforesaid Section 26 and the North Right-of-way Line of
State Road 30 (U.S. 98. 100' R/W); thence go North 77
degrees 09 minutes 03 seconds West along the aforesaid Right-
of-way line, a distance of 1233.51 feet to a point of
curvature: thence go along a curve to the left, having a
radius of 5779.65 feet, an arc distance of 1060.26 feet (CH.
= 1058.78', CH. BRG. = North 82 degrees 24 minutes 26
seconds West); thence departing the aforesaid North Right-of-
way line, go North 02 degrees 59 seconds 27 minutes East, a
distance of 10.00 feet to a point on a curve, being concave
southerly and having a radius of 5789.65 feet and the Point
of Beginning: thence go northwesterly along the aforesaid
curve, an arc distance of 180.00 feet (CH. = 179.99', CH.
BRG. = North 88 degrees 33 minutes 11 seconds West): thence
go North 02 degrees 59 minutes 27 seconds East, a distance
of 215.00 feet: thence go South 88 degrees 38 minutes 25
seconds East, a distance of 178.79 feet to a Point on a
curve, being concave southwesterly and having a radius of
44.90 feet: thence go Southeasterly along the aforesaid
curve, an arc distance of 10.44 feet (CHI. = 10.42'. CHI.
BRAG. = South 03 degrees 39 minutes 46 seconds East) to the
Point of Tangency: thence go South 02 degrees 59 minutes 27
seconds East, a distance of 204.89 feet to the Point of
Beginning.
EXCEPTING THEREFROM THAT PORTION
lying Northerly of and within 66 feet of the centerline of
survey of State Road 30 (US 98) Section 60020, Westerly of
Station 248+00 and lying Northerly of and within 67 feet of
said centerline of survey, between Station 248+00 and
Station 256+51 and lying Northerly of said centerline of
survey and within a transition from 67 feet at Station
256+51 to 87 feet at Station 256+76; and lying Northerly of
and within 110 feet of said centerline of survey, between
Station 256+76 and Station 257+36; and lying Northerly of
said centerline of survey and within a transition from 87
feet at Station 257+36 to 67 feet at Station 257+61; and
lying Northerly of and within 67 feet of said centerline of
survey Easterly of Station 257+611; said centerline to be
described and said Stations to be located as follows:
Commence on a capped rod (RLS # 1835) at the Southeast
corner of Sandestin Estates Subdivision, as per plat
recorded in Plat Book 4, Page 25 of the Public Records of
Walton County, Florida; thence South 44 16' 49" East 101.64
feet; thence North 83 48' 54" East 3476.74 feet (crossing
the East line of Section 27, Township 2 South, Range 21 West
and the West line of Section 26, Township 2 South 2 South,
Range 21 West) to the POINT OF BEGINNING of centerline of
survey to be described herein, said point being the
beginning of a curve, concave Southerly, having a radius of
5729.58 feet; thence run Northeasterly, Easterly and
Southeasterly 1302.52 feet along said curve, thru a central
angle of 13 o1' 31" to Station 248+00; thence continue
Southeasterly 695.62 feet along said curve, thru a central
angle of 6 57' 22" to the end of curve; thence South 76 12'
14" East 155.38 feet to Station 256+51; thence continue
South 76 12' 14" East 25.0 feet to Station 256+76; thence
continue South 76 12' 14" East 60.00 feet to Station 257+36;
thence continue South 76 12'14" East 25.0 feet to Station
257+61; thence continue South 76 12' 14" East 977.87 feet to
the East line of said Section 26 (West line of Section 25,
Township 2 South Range 21 West) at a point 4561.50 feet
South 1 50' 37" West of a four inch by four inch concrete
monument on the Northeast corner of said Section 26
(Northwest corner of said Section 25); thence continue South
76 12' 14" East 1359.55 feet to a point of intersection with
the Southerly extension of the Easterly line of Parcel A of
Tract 308 of said Section 25; and end of centerline of
survey herein described; said point being 518.40 feet South
2 00' 23" West of a capped rod (RLS # 2535) on the Northeast
corner of said partial A; containing 1080 square feet, more
or less.
PURCHASE AGREEMENT
Tractor Supply Company Store - Bristol, VA
This AGREEMENT, entered into effective as of the 26th of Dec,
1996 .
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership ("Fund XVIII") which currently owns an undivided
66.6722% interest in the fee title to that certain real property
legally descrbed in the attached Exhibit "A" (the "Entire
Property") Buyer is William E. Mason and Hazel Mason as tenants
in common ("Buyer"). Seller wishes to sell and Buyer wishes to
buy a portion as Tenant in Common of Seller's interest in the
Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 11.6552% percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Property is $200,000 all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise disbursed
pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$195,000 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5 Closing Date. Escrow shall close on or before January 2, 1997.
6 . Due Diligence. Buyer will have until the expiration of the
fifth business day (The "Review Period") after delivery of all of
the following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Lease Premises or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) originals of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
any review period or inspection period. Such notice shall be
deemed effective only upon receipt by Seller.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property unless Buyer makes
the Second Payment when required. If this Agreement is not
canceled and the Second Payment is made when required, all of
Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the lease defined in paragraph 11 below;
and other items of record disclosed to Buyer during the
contingency period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title (after execution by Buyer of
such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The Buyer will pay the cost of issuing a Standard Owners Title
Insurance Policy in the full amount of the purchase price. Buyer
will pay all recording fees, one-half of the escrow
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
fees, and the cost of an update to the Survey in Sellers
possession (if an update isrequired by buyer.) Each party will
pay its own attorney's fees and costs to document and close this
transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and therafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between Seller and
Tractor Supply Company ("Tenant"), dated April 10th, 1996,
Seller is not aware of any leases of the Property.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prioir to the Closing Date that would materially
affect the Property and be binding on Buyer after the
closing date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Tenant and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Tenant and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
The provisions (d) - (f) above shall survive closing.
13. Closing.
(a) Before the closing date, Seller will deposit into
escrow an executed general warranty deed with English
covenants of title conveying insurable title of the Property
to Buyer, subject to the encumbrances contained in paragraph
8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
sign the Co-Tenancy Agreement, and deliver to the escrow
holder any other documents reasonably required by the escrow
holder to close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the jurisdiction where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the second payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
to Seller within ten (10) days after Buyer has received
written notice from Seller of said destruction or damage.
Seller, however, shall have the right to adjust or settle
any insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any five-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer intends that this transaction qualify as an exchange
under Section 1031 of the Internal Revenue Code of 1986 and
regulations thereunder. Buyer intends to perfect the 1031
exchange by way of a simultaneous exchange of properties through
concurrently conditional closing escrows conducted under escrow
instructions that will qualify the transaction under Section
1031.
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
cancelled unless the breach is cured within 13 days
following the delivery of the notice to the escrow agent.
Within three days after receipt of such notice, the escrow
agent shall send it by United States Mail to the party in
breach at the address contained in the Notice and no further
notice shall be required. If the breach is not cured within
the 13 days following the delivery of the notice to the
escrow agent, this Contract shall be cancelled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed by January 2, 1996
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
William E. Mason and Hazel Mason
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
a copy of this offer and delivering it to Seller. Seller has
five (5) business days from receipt within which to accept this
offer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: WILLIAM E. MASON AND HAZEL MASON AS TENANTS IN COMMON
By: /s/ William E. Mason
William E. Mason /s/ Gail R. Sanford
Williamson Co TN
By: /s/ Hazel Mason Com Exp 4-1-97
Hazel Mason
SELLER: AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP, a
Minnesota limited partnership.
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Buyer Initial: /s/ HM /s/ WEM
Purchase Ageement for Tractor Supply - Bristol, VA
EXHIBIT A LEGAL DESCRIPTION
A certain tract of land, containing 2.74 acres, more or less,
situated, lying, and being in the City of Bristol and in the
County of Washington, State of Virginia, as described by metes
and bounds as follows:
Located in Washington County and the City of Bristol,
Virginia within the Wal-mart Shopping Center Development;
being a portion of Tract No. 8 (Wal-Mart Stores, Inc.) as
shown on Plat of Record in Plat Book 4, Page 63, in the
recorders office for Washington County, Virginia; being more
particularly described as follows;
BEGINNING at an iron pin corner to Walnut Grove Church and
Tract 5 of the Wal-Mart Development, thence proceeding with
the line of Walnut Grove Church North 86 degrees 02 minutes 35
seconds West for a distance of 337.57 feet to an iron pin set
this survey; thence leaving the line of Walnut Grove Church
and proceeding with a new line North 46 degrees 10 minutes 34
seconds East for a distance of 591.56 feet to an iron pin set
this survey in the line of Tract 7; said iron pin being on the
south side of said road South 43 degrees 49 minutes 26
seconds East for a distance of 250.00 feet to an iron pin set
this survey and corner to Tract 5; thence with the line of
Tract 5 South 46 degrees 10 minutes 34 seconds West for a
distance of 364.723 feet to the BEGINNING, containing 2.74 acres
more or less as surveyed by Frizzell Engineering July, 1995.
A part or, but NOT all of Tract No. 8 of the subdivision of the
Wal-Mart Shopping Center as shown on a plat dated April 20, 1993
which plat is of record in the Office of the Clerk of the Circuit
Court of Washington County, Virginia in Plat Book 28, pages 42
through 45, and in records of the City of Bristol in Plat Book 4,
pages 60 through 63, to which plat reference is hereto made for a
more particular description.
TOGETHER WITH a non-exclusive easement for the use of the drive
lanes, as set forth in Easements With Convenants And Restrictions
Affecting Land ("ECR") by and between Wal-Mart Stores, Inc., a
Delaware corporation and Lowe's Home Center, Inc., a North
Carolina corporation, dated November 16, 1993, recorded in the
Clerk's Office Circuit Court, County of Washington, Virginia, in
Deed Book 888, page 345.
BEING a portion of the same real estate conveyed to Tractor
Supply Company, a Tennessee corporation by deed from Wal-Mart
Stores, Inc., a Delaware corporation, dated October 2, 1995,
recorded November 29, 1995, recorded in the Clerk's Office,
Circuit Court, County of Washington, Virginia, in Deed Book 931,
page 231, and in the Clerk's Office, Circuit Court, City of
Bristol, Virginia, in Deed Book 329, page 19.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Applebee's Restaurant - Destin, FL)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 30th day of Dec, 1996, by and
between John Pasini and Elvia Pasini, Trustees of the John Pasini
and Elvia Pasini Trust dated June 11, 1987, (hereinafter called
"Pasini"), and AEI Real Estate Fund XVIII Limited Partnership
(hereinafter called "Fund XVIII") (Pasini, Fund XVIII (and any
other Owner in Fee where the context so indicates) being
hereinafter sometimes collectively called "Co-Tenants" and
referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XVIII presently owns an undivided 69.2373% interest
in and to, and Joseph Nicoletta presently owns and undivided
7.0591% interest in and to and Kent T. Wood and Kimberly Pasini
Wood presently own an undivided 11.0814% interest in and to, and
Pasini presently owns an undivided 12.6222% interest in and to
the land, situated in the City of Destin, County of Walton, and
State of Florida, (legally described upon Exhibit A attached
hereto and hereby made a part hereof) and in and to the
improvements located thereon (hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Pasini's interest by
Fund XVIII; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Pasini of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XVIII, or its designated agent, successors or
assigns. Provided, however, if Fund XVIII shall sell all of its
interest in the Premises, the duties and obligations of Fund
XVIII respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XVIII with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XVIII as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of Pasini. Only Fund XVIII may
obligate Pasini with respect to any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XVIII
agrees to require any Tenant of the Premises to name Pasini as an
insured or additional insured in all insurance policies provided
for, or contemplated by, any lease on the Premises. Fund XVIII
shall use its best efforts to obtain endorsements adding Co-
Tenants to said policies from Tenant within 30 days of
commencement of this agreement. In any event, Fund XVIII shall
distribute any insurance proceeds it may receive, to the extent
consistent with any lease on the Premises, to the Co-Tenants in
proportion to their respective ownership of the Premises.
2. Income and expenses shall be allocated among the Co-Tenants
in proportion to their respective share(s) of ownership. Shares
of net income shall be pro-rated for any partial calendar years
included within the term of this Agreement. Fund XVIII may offset
against, pay to itself and deduct from any payment due to Pasini
under this Agreement, and may pay to itself the amount of
Pasini's share of any legitimate expenses of the Premises which
are not paid by Pasini to Fund XVIII or its assigns, within ten
(10) days after demand by Fund XVIII. In the event there is
insufficient operating income from which to deduct Pasini's
unpaid share of operating expenses, Fund XVIII may pursue any and
all legal remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Tenant under terms of any lease agreement of the Entire Property.
Pasini has elected to retain, and agrees to annually reimburse,
Fund XVIII in the amount of $635 for the expenses, direct and
indirect, incurred by Fund XVIII in providing quarterly
accounting and distributions of Pasini's share of net income and
for tracking, reporting and assessing the calculation of Pasini's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Pasini
authorizes Fund XVIII to deduct such amount from Pasini's share
of revenue from the Premises. Pasini may terminate this
agreement respecting quarterly accounting and distributions in
this paragraph at any time and seek to collect its share of
rental stream directly from the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XVIII's principal office, and each Co-Tenant shall have
access to such books and may inspect and copy any part thereof
during normal business hours. Within ninety (90) days after the
end of each calendar year during the term hereof, Fund XVIII
shall prepare an accurate income statement for the ownership of
the Premises for said calendar year and shall furnish copies of
the same to all Co-Tenants. Quarterly, as its share, Pasini shall
be entitled to receive 12.6222% of all
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
items of income and expense generated by the Premises. Upon
receipt of said accounting, if the payments received by each Co-
Tenant pursuant to this Paragraph 3 do not equal, in the
aggregate, the amounts which each are entitled to receive
proportional to its share of ownership with respect to said
calendar year pursuant to Paragraph 2 hereof, an appropriate
adjustment shall be made so that each Co-Tenant receives the
amount to which it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XVIII, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XVIII sufficient to pay said net operating losses
and to provide necessary operating capital for the Premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-Tenants reserve the right
to escrow proceeds from a sale of their interests in the Premises
to obtain tax deferral by the purchase of replacement property.
6. If any Co-Tenant shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute, or
set forth herein.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until the
expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises and proportional
disbursement of the proceeds thereof, whichever shall first
occur. Unless specifically identified as a personal contract
right or obligation herein, this agreement shall run with any
interest in the Premises and with the title thereto. Once any
person, party or entity has ceased to have an interest in fee in
the Premises, it shall not be bound by, subject to or benefit
from the terms hereof; but its heirs, executors, administrators,
personal representatives, successors or assigns, as the case may
be, shall be substituted for it hereunder. Pasini agrees to
notify Fund XVIII upon the appointment of any successor trustee,
or any amendment of the John Pasini and Elvia Pasini Trust
affecting the powers of the Trustee to manage or dispose of the
Deleeuw's interest in the Premises.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
If to Fund XVIII:
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Wood:
Kent T. Wood and Kimberly Pasini Wood
1550 Monte Vista Drive
Reno, NV 89509
If to Pasini:
John Pasini and Elvia Pasini, Trustees
4000 Bitter Creek Court
Reno, NV 89509
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Pasini John Pasini and Elvia Pasini Trust
By: /s/ John Pasini Tee
John Pasini, Trustee
By: /s/ Elvia Pasini Tee
Elvia Pasini, Trustee
WITNESS:
(Print Name)
WITNESS:
(Print Name)
STATE OF Nevada )
) ss
COUNTY OF Washoe )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 23rd day of December,1996, by Tamara D Cutler, Notary
Public.
[notary seal]
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
Fund XVIII AEI Real Estate Fund XVIII Limited Partnership
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Laura M. Steidl
Laura M Steidl
(Print Name)
WITNESS:
/s/ Kelly Kae Schueller
Kelly Kae Schueller
(Print Name)
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 30th day of
December, 1996, Robert P. Johnson, President of AEI Fund
Management XVIII, Inc., corporate general partner of AEI Real
Estate Fund XVIIII Limited Partnership who executed the foregoing
instrument in said capacity and on behalf of the corporation in
its capacity as corporate general partner, on behalf of said
limited partnership.
/s/ Linda A Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
EXHIBIT A
Legal Description
Premises: APPLEBEE'S NEIGHBORHOOD GRILL & BAR
A portion of Section 26, Township 2 South. Range 21 West,
Walton County, Florida, being more particularly described as
follows:
Commence at the intersection with the East line of the
aforesaid Section 26 and the North Right-of-way Line of
State Road 30 (U.S. 98. 100' R/W); thence go North 77
degrees 09 minutes 03 seconds West along the aforesaid Right-
of-way line, a distance of 1233.51 feet to a point of
curvature: thence go along a curve to the left, having a
radius of 5779.65 feet, an arc distance of 1060.26 feet (CH.
= 1058.78', CH. BRG. = North 82 degrees 24 minutes 26
seconds West); thence departing the aforesaid North Right-of-
way line, go North 02 degrees 59 seconds 27 minutes East, a
distance of 10.00 feet to a point on a curve, being concave
southerly and having a radius of 5789.65 feet and the Point
of Beginning: thence go northwesterly along the aforesaid
curve, an arc distance of 180.00 feet (CH. = 179.99', CH.
BRG. = North 88 degrees 33 minutes 11 seconds West): thence
go North 02 degrees 59 minutes 27 seconds East, a distance
of 215.00 feet: thence go South 88 degrees 38 minutes 25
seconds East, a distance of 178.79 feet to a Point on a
curve, being concave southwesterly and having a radius of
44.90 feet: thence go Southeasterly along the aforesaid
curve, an arc distance of 10.44 feet (CHI. = 10.42'. CHI.
BRAG. = South 03 degrees 39 minutes 46 seconds East) to the
Point of Tangency: thence go South 02 degrees 59 minutes 27
seconds East, a distance of 204.89 feet to the Point of
Beginning.
EXCEPTING THEREFROM THAT PORTION
lying Northerly of and within 66 feet of the centerline of
survey of State Road 30 (US 98) Section 60020, Westerly of
Station 248+00 and lying Northerly of and within 67 feet of
said centerline of survey, between Station 248+00 and
Station 256+51 and lying Northerly of said centerline of
survey and within a transition from 67 feet at Station
256+51 to 87 feet at Station 256+76; and lying Northerly of
and within 110 feet of said centerline of survey, between
Station 256+76 and Station 257+36; and lying Northerly of
said centerline of survey and within a transition from 87
feet at Station 257+36 to 67 feet at Station 257+61; and
lying Northerly of and within 67 feet of said centerline of
survey Easterly of Station 257+611; said centerline to be
described and said Stations to be located as follows:
Commence on a capped rod (RLS # 1835) at the Southeast
corner of Sandestin Estates Subdivision, as per plat
recorded in Plat Book 4, Page 25 of the Public Records of
Walton County, Florida; thence South 44 16' 49" East 101.64
feet; thence North 83 48' 54" East 3476.74 feet (crossing
the East line of Section 27, Township 2 South, Range 21 West
and the West line of Section 26, Township 2 South 2 South,
Range 21 West) to the POINT OF BEGINNING of centerline of
survey to be described herein, said point being the
beginning of a curve, concave Southerly, having a radius of
5729.58 feet; thence run Northeasterly, Easterly and
Southeasterly 1302.52 feet along said curve, thru a central
angle of 13 o1' 31" to Station 248+00; thence continue
Southeasterly 695.62 feet along said curve, thru a central
angle of 6 57' 22" to the end of curve; thence South 76 12'
14" East 155.38 feet to Station 256+51; thence continue
South 76 12' 14" East 25.0 feet to Station 256+76; thence
continue South 76 12' 14" East 60.00 feet to Station 257+36;
thence continue South 76 12'14" East 25.0 feet to Station
257+61; thence continue South 76 12' 14" East 977.87 feet to
the East line of said Section 26 (West line of Section 25,
Township 2 South Range 21 West) at a point 4561.50 feet
South 1 50' 37" West of a four inch by four inch concrete
monument on the Northeast corner of said Section 26
(Northwest corner of said Section 25); thence continue South
76 12' 14" East 1359.55 feet to a point of intersection with
the Southerly extension of the Easterly line of Parcel A of
Tract 308 of said Section 25; and end of centerline of
survey herein described; said point being 518.40 feet South
2 00' 23" West of a capped rod (RLS # 2535) on the Northeast
corner of said partial A; containing 1080 square feet, more
or less.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Applebee's Restaurant - Destin, FL)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 30th day of Dec, 1996, by and
between Kent T. Wood and Kimberly Pasini Wood, (hereinafter
called "Wood"), and AEI Real Estate Fund XVIII Limited
Partnership (hereinafter called "Fund XVIII") (Wood, Fund XVIII
(and any other Owner in Fee where the context so indicates) being
hereinafter sometimes collectively called "Co-Tenants" and
referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XVIII presently owns an undivided 81.8595% interest
in and to, and Joseph Nicoletta presently owns an undivided
7.0591% interest in and to, and Wood presently owns an undivided
11.0814% interest in and to, the land, situated in the City of
Destin, County of Walton, and State of Florida, (legally
described upon Exhibit A attached hereto and hereby made a part
hereof) and in and to the improvements located thereon
(hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Wood's interest by
Fund XVIII; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Wood of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XVIII, or its designated agent, successors or
assigns. Provided, however, if Fund XVIII shall sell all of its
interest in the Premises, the duties and obligations of Fund
XVIII respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XVIII with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XVIII as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
modifications to leases or guarantees of lease or easements
affecting the
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
Premises, on behalf of Wood. Only Fund XVIII may obligate Wood
with respect to any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XVIII
agrees to require any Tenant of the Premises to name Wood as an
insured or additional insured in all insurance policies provided
for, or contemplated by, any lease on the Premises. Fund XVIII
shall use its best efforts to obtain endorsements adding Co-
Tenants to said policies from Tenant within 30 days of
commencement of this agreement. In any event, Fund XVIII shall
distribute any insurance proceeds it may receive, to the extent
consistent with any lease on the Premises, to the Co-Tenants in
proportion to their respective ownership of the Premises.
2. Income and expenses shall be allocated among the Co-Tenants
in proportion to their respective share(s) of ownership. Shares
of net income shall be pro-rated for any partial calendar years
included within the term of this Agreement. Fund XVIII may offset
against, pay to itself and deduct from any payment due to Wood
under this Agreement, and may pay to itself the amount of Wood's
share of any legitimate expenses of the Premises which are not
paid by Wood to Fund XVIII or its assigns, within ten (10) days
after demand by Fund XVIII. In the event there is insufficient
operating income from which to deduct Wood's unpaid share of
operating expenses, Fund XVIII may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Tenant under terms of any lease agreement of the Entire Property.
Wood has elected to retain, and agrees to annually reimburse,
Fund XVIII in the amount of $556 for the expenses, direct and
indirect, incurred by Fund XVIII in providing quarterly
accounting and distributions of Wood's share of net income and
for tracking, reporting and assessing the calculation of Wood's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Wood
authorizes Fund XVIII to deduct such amount from Wood's share of
revenue from the Premises. Wood may terminate this agreement
respecting quarterly accounting and distributions in this
paragraph at any time and seek to collect its share of rental
stream directly from the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XVIII's principal office, and each Co-Tenant shall have
access to such books and may inspect and copy any part thereof
during normal business hours. Within ninety (90) days after the
end of each calendar year during the term hereof, Fund XVIII
shall prepare an accurate income statement for the ownership of
the Premises for said calendar year and shall furnish copies of
the same to all Co-Tenants. Quarterly, as its share, Wood shall
be entitled to receive 11.0814% of all items of income and
expense generated by the Premises. Upon receipt of said
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
accounting, if the payments received by each Co-Tenant pursuant
to this Paragraph 3 do not equal, in the aggregate, the amounts
which each are entitled to receive proportional to its share of
ownership with respect to said calendar year pursuant to
Paragraph 2 hereof, an appropriate adjustment shall be made so
that each Co-Tenant receives the amount to which it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XVIII, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XVIII sufficient to pay said net operating losses
and to provide necessary operating capital for the Premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-Tenants reserve the right
to escrow proceeds from a sale of their interests in the Premises
to obtain tax deferral by the purchase of replacement property.
6. If any Co-Tenant shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute, or
set forth herein.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until the
expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises and proportional
disbursement of the proceeds thereof, whichever shall first
occur. Unless specifically identified as a personal contract
right or obligation herein, this agreement shall run with any
interest in the Premises and with the title thereto. Once any
person, party or entity has ceased to have an interest in fee in
the Premises, it shall not be bound by, subject to or benefit
from the terms hereof; but its heirs, executors, administrators,
personal representatives, successors or assigns, as the case may
be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
If to Fund XVIII:
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Wood:
Kent T. Wood and Kimberly Pasini Wood
1550 Monte Vista Drive
Reno, NV 89509
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Wood Kent T. Wood and Kimberly Pasini Wood
By: /s/ Kent T Wood
Kent T. Wood
By: /s/ Kimberly Pasini Wood
Kimberly Pasini Wood
WITNESS:
(Print Name)
WITNESS:
(Print Name)
STATE OF Nevada )
) ss
COUNTY OF Washoe )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 23rd day of December,1996, by Tamara D Cutler, Notary
Public.
[notary seal]
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin,FL
Fund XVIII AEI Real Estate Fund XVIII Limited Partnership
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Laura M. Steidl
Laura M. Steidl
(Print Name)
WITNESS:
/s/ Kelly Kae Schueller
Kelly Kae Schueller
(Print Name)
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 30th day of
December, 1996, Robert P. Johnson, President of AEI Fund
Management XVIII, Inc., corporate general partner of AEI Real
Estate Fund XVIIII Limited Partnership who executed the foregoing
instrument in said capacity and on behalf of the corporation in
its capacity as corporate general partner, on behalf of said
limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ KTW /s/ KPW
Co-Tenancy Agreement for Applebee's Restaurant - Destin, FL
EXHIBIT A
Legal Description
Premises: APPLEBEE'S NEIGHBORHOOD GRILL & BAR
A portion of Section 26, Township 2 South. Range 21 West,
Walton County, Florida, being more particularly described as
follows:
Commence at the intersection with the East line of the
aforesaid Section 26 and the North Right-of-way Line of
State Road 30 (U.S. 98. 100' R/W); thence go North 77
degrees 09 minutes 03 seconds West along the aforesaid Right-
of-way line, a distance of 1233.51 feet to a point of
curvature: thence go along a curve to the left, having a
radius of 5779.65 feet, an arc distance of 1060.26 feet (CH.
= 1058.78', CH. BRG. = North 82 degrees 24 minutes 26
seconds West); thence departing the aforesaid North Right-of-
way line, go North 02 degrees 59 seconds 27 minutes East, a
distance of 10.00 feet to a point on a curve, being concave
southerly and having a radius of 5789.65 feet and the Point
of Beginning: thence go northwesterly along the aforesaid
curve, an arc distance of 180.00 feet (CH. = 179.99', CH.
BRG. = North 88 degrees 33 minutes 11 seconds West): thence
go North 02 degrees 59 minutes 27 seconds East, a distance
of 215.00 feet: thence go South 88 degrees 38 minutes 25
seconds East, a distance of 178.79 feet to a Point on a
curve, being concave southwesterly and having a radius of
44.90 feet: thence go Southeasterly along the aforesaid
curve, an arc distance of 10.44 feet (CHI. = 10.42'. CHI.
BRAG. = South 03 degrees 39 minutes 46 seconds East) to the
Point of Tangency: thence go South 02 degrees 59 minutes 27
seconds East, a distance of 204.89 feet to the Point of
Beginning.
EXCEPTING THEREFROM THAT PORTION
lying Northerly of and within 66 feet of the centerline of
survey of State Road 30 (US 98) Section 60020, Westerly of
Station 248+00 and lying Northerly of and within 67 feet of
said centerline of survey, between Station 248+00 and
Station 256+51 and lying Northerly of said centerline of
survey and within a transition from 67 feet at Station
256+51 to 87 feet at Station 256+76; and lying Northerly of
and within 110 feet of said centerline of survey, between
Station 256+76 and Station 257+36; and lying Northerly of
said centerline of survey and within a transition from 87
feet at Station 257+36 to 67 feet at Station 257+61; and
lying Northerly of and within 67 feet of said centerline of
survey Easterly of Station 257+611; said centerline to be
described and said Stations to be located as follows:
Commence on a capped rod (RLS # 1835) at the Southeast
corner of Sandestin Estates Subdivision, as per plat
recorded in Plat Book 4, Page 25 of the Public Records of
Walton County, Florida; thence South 44 16' 49" East 101.64
feet; thence North 83 48' 54" East 3476.74 feet (crossing
the East line of Section 27, Township 2 South, Range 21 West
and the West line of Section 26, Township 2 South 2 South,
Range 21 West) to the POINT OF BEGINNING of centerline of
survey to be described herein, said point being the
beginning of a curve, concave Southerly, having a radius of
5729.58 feet; thence run Northeasterly, Easterly and
Southeasterly 1302.52 feet along said curve, thru a central
angle of 13 o1' 31" to Station 248+00; thence continue
Southeasterly 695.62 feet along said curve, thru a central
angle of 6 57' 22" to the end of curve; thence South 76 12'
14" East 155.38 feet to Station 256+51; thence continue
South 76 12' 14" East 25.0 feet to Station 256+76; thence
continue South 76 12' 14" East 60.00 feet to Station 257+36;
thence continue South 76 12'14" East 25.0 feet to Station
257+61; thence continue South 76 12' 14" East 977.87 feet to
the East line of said Section 26 (West line of Section 25,
Township 2 South Range 21 West) at a point 4561.50 feet
South 1 50' 37" West of a four inch by four inch concrete
monument on the Northeast corner of said Section 26
(Northwest corner of said Section 25); thence continue South
76 12' 14" East 1359.55 feet to a point of intersection with
the Southerly extension of the Easterly line of Parcel A of
Tract 308 of said Section 25; and end of centerline of
survey herein described; said point being 518.40 feet South
2 00' 23" West of a capped rod (RLS # 2535) on the Northeast
corner of said partial A; containing 1080 square feet, more
or less.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Tractor Supply Company Store - Bristol, VA)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 2nd day of Jan, 1997, by and
between William E. Mason and Hazel Mason as tenants in common,
(hereinafter called "Mason"), and AEI Real Estate Fund XVIII
Limited Partnership (hereinafter called "Fund XVIII") (Mason,
Fund XVIII (and any other Owner in Fee where the context so
indicates) being hereinafter sometimes collectively called "Co-
Tenants" and referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XVIII presently owns an undivided 55.0170% interest
in and to, and Robert P. Johnson presently owns an undivided
11.7657% interest in and to, and Mason presently owns an
undivided 11.6552% interest in and to, and Arel and Louise
Middleton presently own an undivided 11.6552% interest in and to,
and Joyce R. Scott presently owns an undivided 9.9069% interest
(also referred to herein as Co-Tenant) in and to, the land,
situated in the City of Bristol, County of Washington, and State
of Virginia, (legally described upon Exhibit A attached hereto
and hereby made a part hereof) and in and to the improvements
located thereon (hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Mason's interest by
Fund XVIII; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Mason of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XVIII, or its designated agent, successors or
assigns. Provided, however, if Fund XVIII shall sell all of its
interest in the Premises, the duties and obligations of Fund
XVIII respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XVIII with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XVIII as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of all present or future Co-
Tenants. Only Fund XVIII may obligate any Co-Tenant with respect
to any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XVIII agrees to
require any Tenant of the Premises to name Mason as an insured or
additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XVIII shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from Tenant within 30 days of commencement of this
agreement. In any event, Fund XVIII shall distribute any
insurance proceeds it
Co-Tenant Initial:
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
may receive, to the extent consistent with any lease on the
Premises, to the Co-Tenants in proportion to their respective
ownership of the Premises.
2. Income, expenses and any net proceeds from a sale of the
Premises shall be allocated among the Co-Tenants in proportion to
their respective share(s) of ownership. Shares of net income
shall be pro-rated for any partial calendar years included within
the term of this Agreement. Fund XVIII may offset against, pay to
itself and deduct from any payment due to Mason under this
Agreement, and may pay to itself the amount of Mason's share of
any legitimate expenses of the Premises which are not paid by
Mason to Fund XVIII or its assigns, within ten (10) days after
demand by Fund XVIII. In the event there is insufficient
operating income from which to deduct Mason's unpaid share of
operating expenses, Fund XVIII may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Tenant under terms of any lease agreement of the Premises.
Mason has elected to retain, and agrees to annually reimburse,
Fund XVIII in the amount of $560 for the expenses, direct and
indirect, incurred by Fund XVIII in providing quarterly
accounting and distributions of Mason's share of net income and
for tracking, reporting and assessing the calculation of Mason's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Mason
authorizes Fund XVIII to deduct such amount from Mason's share of
revenue from the Premises. Mason may terminate this agreement
respecting quarterly accounting and distributions in this
paragraph at any time and seek to collect its share of rental
stream directly from the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XVIII's principal office, and each Co-Tenant shall have
access to such books and may inspect and copy any part thereof
during normal business hours. Within ninety (90) days after the
end of each calendar year during the term hereof, Fund XVIII
shall prepare an accurate income statement for the ownership of
the Premises for said calendar year and shall furnish copies of
the same to all Co-Tenants. Quarterly, as its share, Mason shall
be entitled to receive 11.6552% of all items of income and
expense generated by the Premises. Upon receipt of said
accounting, if the payments received by each Co-Tenant pursuant
to this Paragraph 3 do not equal, in the aggregate, the amounts
which each are entitled to receive with respect to said calendar
year pursuant to Paragraph 2 hereof, an appropriate adjustment
shall be made so that each Co-Tenant receives the amount to which
it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XVIII, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XVIII sufficient to pay said net operating losses
and to provide necessary operating capital for the premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-
Co-Tenant Initial: /s/ HM /s/ WEM
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
Tenants reserve the right to escrow proceeds from a sale of their
interests in the Premises to obtain tax deferral by the purchase
of replacement property.
6. If any Co-Tenant, shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute, or
set forth herein.
7. This property management agreement shall continue in full
force and effect and shall bind and inure to the benefit of the
Co-Tenant and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns until
the expiration date plus extensions of the net lease agreement
or upon the sale of the entire Premises in accordance with the
terms hereof and proper disbursement of the proceeds thereof,
whichever shall first occur. Unless specifically identified as a
personal contract right or obligation herein, this agreement
shall run with any interest in the Premises and with the title
thereto. Once any person, party or entity has ceased to have an
interest in fee in the Premises, it shall not be bound by,
subject to or benefit from the terms hereof; but its heirs,
executors, administrators, personal representatives, successors
or assigns, as the case may be, shall be substituted for it
hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XVIII:
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Mason:
William Mason
If to Middleton:
Arel D. and Louise B. Middleton
P.O. Box 283
Wasco, OR 97065-0283
Co-Tenant Initial: /s/ HM /s/ WEM
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
If to Scott:
Joyce R. Scott
1562 Rainbow Drive
Santa Ana, CA 92705
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
12. This Agreement is governed by the Laws of the Commonwealth
of Virginia.
Co-Tenant Initial: /s/ HM /s/ WEM
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Mason William E. Mason and Hazel Mason as tenants in common
By: /s/ William E Mason
William E. Mason
By: /s/ Hazel Mason
Hazel Mason
WITNESS:
/s/ Patti D. Morris
Patti D Morris
(Print Name)
WITNESS:
/s/ Tammy Ward
Tammy Ward
(Print Name)
STATE OF Tennessee)
) ss
COUNTY OF Williamson)
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 26th day of December,1996, by Gail Sanford, Notary
Public.
/s/ Gail Sanford, Notary
Com Exp 4-1-97
Co-Tenant Initial: /s/ HM /s/ WEM
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
Fund XVIII AEI Real Estate Fund XVIII Limited Partnership
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Laura M. Steidl
Laura M. Steidl
(Print Name)
WITNESS:
/s/ JoAnn Rath
JoAnn Rath
(Print Name)
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 2nd day of January,
1997, Robert P. Johnson, President of AEI Fund Management XVIII,
Inc., corporate general partner of AEI Real Estate Fund XVIII
Limited Partnership, who executed the foregoing instrument in
said capacity and on behalf of the corporation in its capacity as
corporate general partner, on behalf of said limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ HM
Co-Tenancy Ageement for Tractor Supply - Bristol, VA
EXHIBIT A LEGAL DESCRIPTION
A certain tract of land, containing 2.74 acres, more or less,
situated, lying, and being in the City of Bristol and in the
County of Washington, State of Virginia, as described by metes
and bounds as follows:
Located in Washington County and the City of Bristol,
Virginia within the Wal-mart Shopping Center Development;
being a portion of Tract No. 8 (Wal-Mart Stores, Inc.) as
shown on Plat of Record in Plat Book 4, Page 63, in the
recorders office for Washington County, Virginia; being more
particularly described as follows;
BEGINNING at an iron pin corner to Walnut Grove Church and
Tract 5 of the Wal-Mart Development, thence proceeding with
the line of Walnut Grove Church North 86 degrees 02 minutes 35
seconds West for a distance of 337.57 feet to an iron pin set
this survey; thence leaving the line of Walnut Grove Church
and proceeding with a new line North 46 degrees 10 minutes 34
seconds East for a distance of 591.56 feet to an iron pin set
this survey in the line of Tract 7; said iron pin being on the
south side of said road South 43 degrees 49 minutes 26
seconds East for a distance of 250.00 feet to an iron pin set
this survey and corner to Tract 5; thence with the line of
Tract 5 South 46 degrees 10 minutes 34 seconds West for a
distance of 364.723 feet to the BEGINNING, containing 2.74 acres
more or less as surveyed by Frizzell Engineering July, 1995.
A part or, but NOT all of Tract No. 8 of the subdivision of the
Wal-Mart Shopping Center as shown on a plat dated April 20, 1993
which plat is of record in the Office of the Clerk of the Circuit
Court of Washington County, Virginia in Plat Book 28, pages 42
through 45, and in records of the City of Bristol in Plat Book 4,
pages 60 through 63, to which plat reference is hereto made for a
more particular description.
TOGETHER WITH a non-exclusive easement for the use of the drive
lanes, as set forth in Easements With Convenants And Restrictions
Affecting Land ("ECR") by and between Wal-Mart Stores, Inc., a
Delaware corporation and Lowe's Home Center, Inc., a North
Carolina corporation, dated November 16, 1993, recorded in the
Clerk's Office Circuit Court, County of Washington, Virginia, in
Deed Book 888, page 345.
BEING a portion of the same real estate conveyed to Tractor
Supply Company, a Tennessee corporation by deed from Wal-Mart
Stores, Inc., a Delaware corporation, dated October 2, 1995,
recorded November 29, 1995, recorded in the Clerk's Office,
Circuit Court, County of Washington, Virginia, in Deed Book 931,
page 231, and in the Clerk's Office, Circuit Court, City of
Bristol, Virginia, in Deed Book 329, page 19.
PURCHASE AGREEMENT
Taco Cabana, San Antonio, TX
This AGREEMENT, entered into effective as of the 14 of February,
1997 .
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership ("Seller"), Seller presently holds an undivided
62.3243% interest in the fee title to that certain real property
legally described in the attached Exhibit "A". (the "Entire
Property") Buyer is Anton Kuster, Jr. ("Buyer"). Seller wishes
to sell and Buyer wishes to buy a portion as Tenant in Common of
Seller's interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 11.5896% percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property. To the best of Seller's knowledge, the purchase
of the Entire Property is the purchase of an interest in real
property under Texas law.
3. Purchase Price . The purchase price for this percentage
interest in the Entire Property is $218,050 all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (which shall be deposited into escrow according to
the terms hereof) (the "First Payment"). The First Payment
will be credited against the purchase price when and if
escrow closes and the sale is completed, or otherwise
dispersed pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$213,050 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the Closing Date.
(c) Seller hereby acknowledges receipt of the sum of $50.00
cash (the "Option Consideration") from Buyer, as
consideration for execution of this Agreement by Seller. If
the purchase and sale of the Property is consummated
pursuant to this Agreement, the Option Consideration shall
be applied toward the purchase price paid by Buyer. If this
Agreement is terminated pursuant to a default by Seller
hereunder, the Option Consideration shall be immediately
returned by Seller to Buyer. If this Agreement is
terminated for any reason other than a default by Seller
hereunder, Seller shall be entitled to retain the Option
Consideration.
5 Closing Date. Escrow shall close on or before March 7, 1997.
6 . Due Diligence. Buyer will have until the expiration of the
fifth business day after delivery of each of following items, to
be supplied by Seller, to conduct all of its inspections and due
diligence and satisfy itself regarding each item, the Property,
and this transaction. Buyer agrees to indemnify and hold Seller
harmless for any loss or damage to the Leased Premises or persons
caused by Buyer or its agents arising out of such physical
inspections of the Entire Property. (The "Review Period")
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) copies of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
Closing Date be delivered to the Seller on the Closing Date.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
any Review Period. Such notice shall be deemed effective only
upon receipt by Seller. If this Agreement is not canceled as set
forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property. If this Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the commitment of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
Buyer will own insurable title to the Property subject only to:
the title company's standard exceptions; current real property
taxes and assessments; survey exceptions; the rights of parties
in possession pursuant to the lease defined in paragraph 11
below; and other items of record disclosed to Buyer during the
Review Period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The Buyer will pay the cost of issuing a Standard Owners Title
Insurance Policy in the full amount of the purchase price, if
Buyer shall decide to purchase the same. Buyer will pay all
recording fees, one-half of the escrow fees, and the cost of an
update to the Survey in Sellers possession (if an update is
required by buyer.) Each party will pay its own attorney's fees
and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests, pro-rated, however,
to the date of closing; for the period prior to closing,
such taxes and asessments shall be the responsibility of
Seller, if Tenant shall not pay the same. Seller and Buyer
shall likewise pay in proportion to their ownership
interests all taxes due and payable in the year after
Closing and any unpaid installments of special assessments
payable therewith and thereafter, if such unpaid levied and
pending special assessments and real estate taxes are not
paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
date of Closing. Seller shall be entitled to all income
earned and shall be responsible for all expenses incurred
prior to the date of Closing, and Buyer shall be entitled to
its proportionate share of all income earned and shall be
responsible for its proportionate share of all operating
expenses of the Property incurred on and after the date of
closing, if the same are not paid by any tenant of the
Entire Property.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between Seller and
Taco Cabana, Inc. ("lessee"), dated July 19, 1991 which was
assigned to Texas Taco Cabana LP pursuant to the General
Assignment and Assumption of Leases between Taco Cabana,
Inc. and TC Lease Holdings III, V and VI, Inc. dated October
31, 1993 and pursuant to the General Assignment and
Assumption of Leases between TC Lease Holding III V and VI,
Inc. and Texas Taco Cabana LP dated October 31, 1993 and
pursuant to the Consents and Acknowledgments Concerning Net
Lease Agreements between Taco Cabana, Inc. and AEI Real
Estate Fund XVIII Limited Partnership dated June 2, 1994,
Seller is not aware of any leases of the Property. A copy
of the above referenced documents is incorporated herein as
"Exhibit "B". The above referenced lease agreement has an
option to purchase in favor of the Tenant as set forth in
Article 34 of said lease agreement.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the Closing Date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prior to the Closing Date that would materially
affect the Property and be binding on Buyer after the
Closing Date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Lessee and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property. This provision shall survive closing.
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
13. Closing.
(a) Before the Closing Date, Seller will deposit into
escrow an executed special warranty deed conveying insurable
title of the Property to Buyer, subject to the encumbrances
contained in paragraph 8 above.
(b) On or before the Closing Date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign the Co-
Tenancy Agreement, and deliver to the escrow holder any
other documents reasonably required by the escrow holder to
close escrow.
(c) On the Closing Date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
owners title policy purchase by buyer; immediately deliver
to Seller the portion of the purchase price deposited into
escrow by cashier's check or wire transfer (less debits and
prorations, if any); deliver to Seller and Buyer a signed
counterpart of the escrow holder's certified closing
statement and take all other actions necessary to close
escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the second payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
assurances as Seller or the Title Company may require and
be reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any five-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to Western Title Co. who will
act as Facilitator to perfect the 1031 exchange by preparing an
agreement of exchange of Real Property whereby Western Title will
be an independent third party purchasing the ownership interest
in subject property from Seller and selling the ownership
interest in subject property to Buyer under the same terms and
conditions as documented in this Purchase Agreement. Buyer asks
the Seller to cooperate in the perfection of such an exchange at
no additional cost or expense or delay in time. Buyer hereby
indemnifies and holds Seller harmless from any claims and/or
actions resulting from said exchange. Pursuant to the direction
of Western Title Co., Seller will deed the Property to Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
canceled unless the breach is cured within 13 days following
the delivery of the notice to the escrow agent. Within
three days after receipt of such notice, the escrow agent
shall send it by United States Mail to the party in breach
at the address contained in the Notice and no further notice
shall be required. If the breach is not cured within the 13
days following the delivery of the notice to the escrow
agent, this Contract shall be canceled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
understandings. Exhibits attached to this Agreement are
incorporated into this Agreement.
(b) If this escrow has not closed by March 7, 1997 through
no fault of Seller, Seller may either, at its election,
extend the Closing Date or exercise any remedy available to
it by law, including terminating this Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Anton Kuster Jr.
4214 Danury
Amarillo TX 79109
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: Anton Kuster, Jr.
By:/s/ Anton Kuster, Jr.
Anton Kuster, Jr.
SELLER: AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP, a
Minnesota limited partnership.
By: AEI Fund Management XVIII, Inc., its corporate general partner
By:/s/ Robert P.Johnson
Robert P. Johnson, President
Buyer Initial /s/ AK Jr.
Purchse Agreement for Taco Cabana, San Antonio, TX
Exhibit A
Legal Description
Lot 31, Block 1, New City Block 15600, CKE Subdivion, Unit
3, an addition to the City of San Antonio, Bexar County,
Texas, according to the map or plat thereof, recorded in
volume 9504, Page 182, Deed and Plat Records of Bexar
County, Texas.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Taco Cabana - San Antonio, TX)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 28 day of February, 1997, by and
between Anton Kuster, Jr. (hereinafter called "Kuster"), and AEI
Real Estate Fund XVIII Limited Partnership (hereinafter called
"Fund XVIII") (Kuster, Fund XVIII (and any other Owner in Fee
where the context so indicates) being hereinafter sometimes
collectively called "Co-Tenants" and referred to in the neuter
gender).
WITNESSETH:
WHEREAS, Fund XVIII presently owns an undivided 50.7347% interest
in and to, and Kuster presently owns an undivided 11.5896%
interest in and to, and The Hesson Family Trust presently owns an
undivided 13.2895% interest in and to, and Arel D. and Louise B.
Middleton presently owns and undivided 10.6316% interest (also
referred to herein as Co-Tenant) in and to, and Carolyn W.
Davidson presently owns an undivided 13.7546% interest (also
referred to herein as Co-Tenant) in and to the land, situated in
the City of San Antonio, County of Bexar, and State of Texas,
(legally described upon Exhibit A attached hereto and hereby made
a part hereof) and in and to the improvements located thereon
(hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Kuster's interest by
Fund XVIII; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Kuster of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XVIII, or its designated agent, successors or
assigns. Provided, however, if Fund XVIII shall sell all of its
interest in the Premises, the duties and obligations of Fund
XVIII respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XVIII with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XVIII as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of Kuster. Only Fund XVIII may
obligate Kuster with respect to any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XVIII agrees to
require any lessee of the Premises to name Kuster as an insured
or additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XVIII shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from lessee within 30 days of commencement of this
Co-Tenant Initial: /s/ AKJR
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
agreement. In any event, Fund XVIII shall distribute any
insurance proceeds it may receive, to the extent consistent with
any lease on the Premises, to the Co-Tenants in proportion to
their respective ownership of the Premises.
2. Income, expenses and any net proceeds from a sale of the
Premises shall be allocated among the Co-Tenants in proportion to
their respective share(s) of ownership. Shares of net income
shall be pro-rated for any partial calendar years included within
the term of this Agreement. Fund XVIII may offset against, pay to
itself and deduct from any payment due to Kuster under this
Agreement, and may pay to itself the amount of Kuster's share of
any legitimate expenses of the Premises which are not paid by
Kuster to Fund XVIII or its assigns, within ten (10) days after
demand by Fund XVIII. In the event there is insufficient
operating income from which to deduct Kuster's unpaid share of
operating expenses, Fund XVIII may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Lessee under terms of any triple net lease agreement of the
Entire Property.
Kuster has elected to retain, and agrees to annually reimburse,
Fund XVIII in the amount of $649 for the expenses, direct and
indirect, incurred by Fund XVIII in providing quarterly
accounting and distributions of Kuster's share of net income and
for tracking, reporting and assessing the calculation of Kuster's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Kuster
authorizes Fund XVIII to deduct such amount from Kuster's share
of revenue from the Premises. Kuster may terminate this agreement
at any time and collect it's share of rental stream directly from
the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XVIII's principal office, and each Co-Tenant shall have
access to such books and may inspect and copy any part thereof
during normal business hours. Within ninety (90) days after the
end of each calendar year during the term hereof, Fund XVIII
shall prepare an accurate income statement for the ownership of
the Premises for said calendar year and shall furnish copies of
the same to all Co-Tenants. Quarterly, as its share, Kuster shall
be entitled to receive 11.5896% of all items of income and
expense generated by the Premises, and Fund XVIII shall be
entitled to receive 50.7347% as its share. Upon receipt of said
accounting, if the payments received by each Co-Tenant pursuant
to this Paragraph 3 do not equal, in the aggregate, the amounts
which each are entitled to receive with respect to said calendar
year pursuant to Paragraph 2 hereof, an appropriate adjustment
shall be made so that each Co-Tenant receives the amount to which
it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XVIII, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XVIII sufficient to pay said net operating losses
and to provide necessary operating capital for the premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Subject to the rights of any Tenant under a lease of the
Premises, Co-Tenants may, at any time, sell, finance, or
otherwise create a lien upon their
Co-Tenant Initial: /s/ AKJR
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
interest in the Premises but only upon their interest and not
upon any part of the interest held, or owned, by any other Co-
Tenant. All Co-Tenants reserve the right to escrow proceeds from
a sale of their interests in the Premises to obtain tax deferral
by the purchase of replacement property.
6. If any Co-Tenant, shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until the
expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises in accordance with the terms
hereof and proper disbursement of the proceeds thereof, whichever
shall first occur. Unless specifically identified as a personal
contract right or obligation herein, this agreement shall run
with any interest in the Premises and with the title thereto.
Once any person, party or entity has ceased to have an interest
in fee in the Premises, it shall not be bound by, subject to or
benefit from the terms hereof; but its heirs, executors,
administrators, personal representatives, successors or assigns,
as the case may be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XVIII:
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Davidson:
Carolyn W. Davidson
4407 Ortega Forest Drive
Jacksonville, FL 32210
If to Middleton:
Arel D. and Louise B. Middleton
P.O. Box 283
Wasco, OR 97065-0283
If to Hesson:
Ivan Hesson, Trustee
3864 Via Lasbrisas
Santa Barbera, CA 93110
Co-Tenant Initial: /s/ AKJR
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
If to Kuster:
Tony Kuster
4214 Danbury
Amarillo, TX 79109
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
10. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
11. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
12. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Kuster Anton Kuster, Jr.
By: /s/ Anton Kuster, Jr
Anton Kuster, Jr.
Witness By:
Witness By:
STATE OF TX)
) ss
COUNTY OF Peter)
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 14 day of Feb,1997, by Shirley Sue Harrison, Notary
Public.
[notary seal]
Co-Tenant Initial: /s/ AKJR
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
Fund XVIII AEI Real Estate Fund XVIII Limited Partnership
By: AEI Fund Management XVIII, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Witness By: /s/ Laura Steidl
Witness By: /s/ Diane P Autey
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 3rd day of March,
1997, Robert P. Johnson, President of AEI Fund Management XVIII,
Inc., corporate general partner of AEI Real Estate Fund XVIII
Limited Partnership, who executed the foregoing instrument in
said capacity and on behalf of the corporation in its capacity as
corporate general partner, on behalf of said limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ AKJR
Co-Tenancy Agreement for Taco Cabana - San Antonio, TX
Exhibit A
Legal Description
Lot 31, Block 1, New City Block 15600, CKE Subdivion, Unit 3, an
addition to the City of San Antonio, Bexar County, Texas,
according to the map or plat thereof, recorded in volume 9504,
Page 182, Deed and Plat Records of Bexar County, Texas.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000840459
<NAME> AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,359,926
<SECURITIES> 0
<RECEIVABLES> 12,870
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,372,796
<PP&E> 14,365,491
<DEPRECIATION> (1,706,567)
<TOTAL-ASSETS> 15,031,720
<CURRENT-LIABILITIES> 451,146
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,580,574
<TOTAL-LIABILITY-AND-EQUITY> 15,031,720
<SALES> 0
<TOTAL-REVENUES> 1,724,727
<CGS> 0
<TOTAL-COSTS> 2,547,338
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (199,182)
<INCOME-TAX> 0
<INCOME-CONTINUING> (199,182)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (199,182)
<EPS-PRIMARY> (8.87)
<EPS-DILUTED> (8.87)
</TABLE>
