SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: June 30, 1998
Commission file number: 0-18289
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified 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)
(651) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 1998 and December 31, 1997
Statements for the Periods ended June 30, 1998 and 1997:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,796,274 $ 4,213,283
Receivables 39,356 20,547
----------- -----------
Total Current Assets 2,835,630 4,233,830
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 5,021,358 3,970,611
Buildings and Equipment 8,160,728 8,160,729
Construction in Progress 522,495 43,208
Property Acquisition Costs 108,935 97,181
Accumulated Depreciation (2,000,193) (1,853,954)
----------- -----------
11,813,323 10,417,775
Real Estate Held for Sale 372,980 372,980
----------- -----------
Net Investments in Real Estate 12,186,303 10,790,755
----------- -----------
Total Assets $15,021,933 $15,024,585
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 59,458 $ 23,780
Distributions Payable 195,297 131,154
Unearned Rent 58,415 5,000
----------- -----------
Total Current Liabilities 313,170 159,934
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (48,377) (46,818)
Limited Partners, $1,000 Unit Value;
30,000 Units authorized; 22,783 Issued;
21,326 and 21,487 Units outstanding in
1998 and 1997, respectively 14,757,140 14,911,469
----------- -----------
Total Partners' Capital 14,708,763 14,864,651
----------- -----------
Total Liabilities and Partners' Capital $15,021,933 $15,024,585
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Three Months Ended Six Months Ended
6/30/98 6/30/97 6/30/98 6/30/97
INCOME:
Rent $ 357,837 $ 340,839 $ 703,326 $ 704,088
Investment Income 57,392 51,941 117,453 86,606
---------- ---------- ---------- ----------
Total Income 415,230 392,780 820,779 790,694
---------- ---------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 67,334 71,334 131,137 134,031
Partnership Administration
and Property Management -
Unrelated Parties 17,431 24,126 34,428 49,747
Depreciation 73,571 78,993 146,239 160,539
---------- ---------- ---------- ----------
Total Expenses 158,336 174,453 311,804 344,317
---------- ---------- ---------- ----------
OPERATING INCOME 256,894 218,327 508,975 446,377
GAIN ON SALE OF REAL ESTATE 0 0 0 376,462
---------- ---------- ---------- ----------
NET INCOME $ 256,894 $ 218,327 $ 508,975 $ 822,839
========== ========== ========== ==========
NET INCOME ALLOCATED:
General Partners $ 2,570 $ 2,183 $ 5,090 $ 8,228
Limited Partners 254,324 216,144 503,885 814,611
---------- ---------- ---------- ----------
$ 256,894 $ 218,327 $ 508,975 $ 822,839
========== ========== ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(21,326, 21,764, 21,407 and
21,764 weighted average Units
outstanding for the periods,
respectively) $ 11.93 $ 9.93 $ 23.54 $ 37.43
========== ========== ========== ==========
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 PERIODS ENDED JUNE 30
(Unaudited)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 508,975 $ 822,839
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 146,239 160,539
Gain on Sale of Real Estate 0 (376,462)
(Increase) Decrease in Receivables (18,809) 10,656
Increase (Decrease) in Payable to
AEI Fund Management, Inc. 35,678 (116,687)
Decrease in Security Deposit 0 (665)
Increase in Unearned Rent 53,415 45,713
----------- -----------
Total Adjustments 216,523 (276,906)
----------- -----------
Net Cash Provided By
Operating Activities 725,498 545,933
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,541,787) 0
Proceeds from Sale of Real Estate 0 1,553,191
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (1,541,787) 1,553,191
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 64,143 51
Distributions to Partners (534,599) (667,383)
Redemption Payments (130,264) 0
----------- -----------
Net Cash Used For
Financing Activities (600,720) (667,332)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,417,009) 1,431,792
CASH AND CASH EQUIVALENTS, beginning of period 4,213,283 2,359,926
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,796,274 $ 3,791,718
=========== ===========
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 PERIODS ENDED JUNE 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ (49,658) $14,630,232 $14,580,574 21,764.38
Distributions (6,674) (660,709) (667,383)
Net Income 8,228 814,611 822,839
--------- ----------- ----------- -----------
BALANCE, June 30, 1997 $ (48,104) $14,784,134 $14,736,030 21,764.38
========= =========== =========== ===========
BALANCE, December 31, 1997 $ (46,818) $14,911,469 $14,864,651 21,487.28
Distributions (5,346) (529,253) (534,599)
Redemption Payments (1,303) (128,961) (130,264) (161.00)
Net Income 5,090 503,885 508,975
--------- ----------- ----------- -----------
BALANCE, June 30, 1998 $ (48,377) $14,757,140 $14,708,763 21,326.28
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund 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., 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.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those Partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% to the General Partners. Losses will be allocated 98%
to the Limited Partners and 2% to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
The Partnership owned 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 were vacant, the Partnership was
responsible for the real estate taxes and other costs
required to maintain the properties.
No rents were collected from the Sizzler restaurants in the
first six months of 1998 and 1997. The total amount of rent
not collected in 1998 and 1997 was $91,840 and $198,471,
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 $19,867, which
resulted in a net loss of $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 were 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 $1,654,600
($693,500 for the Springboro Sizzler, and $961,100 for the
Fairfield Sizzler) was recognized in the fourth quarter of
1996, which is the difference between book value at December
31, 1996 of $2,427,600 ($1,066,500 for the Springboro
Sizzler and $1,361,100 for the Fairfield Sizzler) and the
estimated market value of $773,000 ($373,000 for the
Springboro Sizzler and $400,000 for the Fairfield Sizzler).
The charge was recorded against the cost of the land,
building and equipment.
On September 22, 1997, the Partnership sold the Sizzler
restaurant in Fairfield, Ohio to an unrelated third party.
The Partnership received net sale proceeds of $528,476,
which is in excess of the book value of the property after
the recognition of the real estate impairment. As a result,
the Partnership recognized a net gain of $128,498.
On July 21, 1998, the Partnership sold its interest in the
Sizzler restaurant in Springboro, Ohio to an unrelated third
party. The Partnership received net sale proceeds of
approximately $350,000, which resulted in a net loss on the
sale of approximately $21,000.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) 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 annual base
rent from $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 pre-petition and post-petition rents due of
$75,775 and the Partnership's related administrative and
legal expenses. However, due to the uncertainty of
collection, the Partnership has not accrued any of these
amounts for financial reporting purposes.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Rally's properties was approximately $270,000. In the
fourth quarter of 1997, a charge to operations for real
estate impairment of $220,500 was recognized, which is the
difference between the book value at December 31, 1997 of
$490,500 and the estimated fair value of $270,000. The
charge was recorded against the cost of the building and
equipment.
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 1996 rent income and real estate taxes due and a
portion of the real estate taxes due in 1997. In 1997, the
Partnership took possession of the property and listed it
for sale or lease. The Partnership was scheduled to
receive, but did not collect, $59,160 and $56,884 in rent in
the first six months of 1998 and 1997, respectively. These
amounts were not accrued for financial reporting purposes.
While the property is vacant, the Partnership is responsible
for real estate taxes and other costs required to maintain
the property.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Brownsville property was approximately $466,600. In the
fourth quarter of 1997, a charge to operations for real
estate impairment of $239,600 was recognized, which is the
difference between the book value at December 31, 1997 of
$706,200 and the estimated fair value of $466,600. The
charge was recorded against the cost of the land and
building.
Through December 31, 1997, the Partnership sold 94.1709% of
the Applebee's restaurant in Destin, Florida in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,413,627
which resulted in a total net gain of $481,379. The total
cost and related accumulated depreciation of the interests
sold was $1,053,565 and $121,317, respectively. For the six
months ended June 30, 1997, the net gain was $153,716.
Through December 31, 1997, the Partnership sold 90.6301% of
a Taco Cabana restaurant in San Antonio, Texas in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,520,182
which resulted in a total net gain of $562,654. The total
cost and related accumulated depreciation of the interests
sold was $1,043,983 and $86,455, respectively. For the six
months ended June 30, 1997, the net gain was $69,649.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through December 31, 1997, the Partnership sold 77.4842% of
its interest in the Tractor Supply Company in Bristol,
Virginia in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,189,572 which resulted in a total net gain of
$217,301. The total cost and related accumulated
depreciation of the interests sold was $997,602 and $25,331,
respectively. For the six months ended June 30, 1997, the
net gain was $72,607.
Through December 31, 1997, the Partnership sold 26.0312% of
its interest in the Champps Americana restaurant in
Columbus, Ohio in three separate transactions to unrelated
third parties. The Partnership received total net sale
proceeds of $807,777 which resulted in a total net gain of
$151,139. The total cost and related accumulated
depreciation of the interests sold was $667,813 and $11,175,
respectively. For the six months ended June 30, 1997, the
net gain was $80,490.
During the first six months of 1997, the Partnership
distributed $60,467 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
$2.75 per Limited Partnership Unit.
On July 30, 1997, the Partnership purchased a Fuddrucker's
restaurant in Thornton, Colorado for $1,405,771. The
property is leased to Fuddrucker's, Inc. under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $148,387.
On December 23, 1997, the Partnership purchased a 23.95%
interest in a parcel of land in Troy, Michigan for $361,889.
The land is leased to Champps Entertainment, Inc. (Champps)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $25,332. Effective June 20, 1998,
the annual rent was increased to $37,998. Simultaneously
with the purchase of the land, the Partnership entered into
a Development Financing Agreement under which the
Partnership will advance funds to Champps for the
construction of a Champps Americana restaurant on the site.
Through June 30, 1998, the Partnership had advanced $417,607
for the construction of the property and was charging
interest on the advances at a rate of 7%. Effective June
20, 1998, the interest rate was increased to 10.5%. The
Partnership's share of the total purchase price, including
the cost of the land, will be approximately $1,077,750.
After the construction is complete, the Lease Agreement will
be amended to require annual rental payments of
approximately $113,000. The remaining interests in the
property are owned by AEI Real Estate Fund XV Limited
Partnership, AEI Real Estate Fund XVII Limited Partnership,
and AEI Net Lease Income & Growth Fund XIX Limited
Partnership, affiliates of the Partnership.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In January, 1998, the Partnership entered into an agreement
to purchase a 45% interest in a Tumbleweed restaurant in
Chillicothe, Ohio. On April 13, 1998, the Partnership
purchased its share of the land for $216,915. The land is
leased to Tumbleweed, LLC (TLLC) under a Lease Agreement
with a primary term of 15 years and annual rental payments
of $18,438. Simultaneously with the purchase of the land,
the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to
TLLC for the construction of a Tumbleweed restaurant on the
site. Through June 30, 1998, the Partnership had advanced
$70,688 for the construction of the property and was
charging interest on the advance at a rate of 8.5%. The
Partnership's share of the total purchase price, including
the cost of the land, will be approximately $610,650. After
the construction is complete, the Lease Agreement will be
amended to require annual rental payments of approximately
$62,600. The remaining interests in the property are owned
by the Individual General Partner and AEI Net Lease Income &
Growth Fund XIX Limited Partnership, affiliates of the
Partnership.
In April, 1998, the Partnership entered into an agreement to
purchase a Tumbleweed restaurant in Columbus, Ohio. On May
1, 1998, the Partnership purchased the land for $503,832.
The land is leased to TLLC under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$42,826. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership will advance funds to TLLC for
the construction of a Tumbleweed restaurant on the site.
Through June 30, 1998, the Partnership had advanced $34,200
for the construction of the property and was charging
interest on the advances at a rate of 8.5%. The total
purchase price, including the cost of the land, will be
approximately $1,490,000. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $153,000.
In April, 1998, the Partnership entered into an Agreement to
purchase an Old Country Buffet restaurant to be constrructed
in Northlake, Illinois. On May 18, 1998, the Partnership
purchased the land for $330,000. The Partnership is
charging interest on the land at a rate of 10% until the
building is completed. The total purchase price will be
approximately $1,300,000. After the construction is
complete, the Partnership will pay approximately $970,000 of
the construction costs. The remainder of the construction
costs will be paid by the tenant. The property is leased to
OCB Realty Co. under a Lease Agreement with a primary term
of 20 years and annual rental payments of approximately
$130,000, which begin after construction is completed.
During 1997 and the first six months of 1998, the
Partnership incurred net costs of $134,364 related to the
review of potential property acquisitions. Of these costs,
$25,429 have been capitalized and allocated to land,
building and equipment. The remaining costs of $108,935
have been capitalized and will be allocated to property
acquisitions in future periods.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Payable to AEI Fund Management -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the six months ended June 30, 1998 and 1997, the
Partnership recognized rental income of $703,326 and $704,088,
respectively. During the same periods, the Partnership earned
investment income of $117,453 and $86,606, respectively. In
1998, rental income decreased as a result of the property sales
discussed below. The decrease in rental income was offset by
additional rent received from four property acquisitions in 1997
and 1998, rent increases on ten properties, and additional
investment income earned on the net proceeds from the property
sales.
The Partnership owned 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 were vacant,
the Partnership was responsible for the real estate taxes and
other costs required to maintain the properties.
No rents were collected from the Sizzler restaurants in
the first six months of 1998 and 1997. The total amount of rent
not collected in 1998 and 1997 was $91,840 and $198,471,
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 $19,867, which
resulted in a net loss of $31,700, which was recognized as a real
estate impairment in 1996.
ITEM 2.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 were 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 $1,654,600 ($693,500 for the Springboro Sizzler,
and $961,100 for the Fairfield Sizzler) was recognized in the
fourth quarter of 1996, which is the difference between book
value at December 31, 1996 of $2,427,600 ($1,066,500 for the
Springboro Sizzler and $1,361,100 for the Fairfield Sizzler) and
the estimated market value of $773,000 ($373,000 for the
Springboro Sizzler and $400,000 for the Fairfield Sizzler). The
charge was recorded against the cost of the land, building and
equipment.
On September 22, 1997, the Partnership sold the Sizzler
restaurant in Fairfield, Ohio to an unrelated third party. The
Partnership received net sale proceeds of $528,476, which is in
excess of the book value of the property after the recognition of
the real estate impairment. As a result, the Partnership
recognized a net gain of $128,498.
On July 21, 1998, the Partnership sold its interest in the
Sizzler restaurant in Springboro, Ohio to an unrelated third
party. The Partnership received net sale proceeds of
approximately $350,000, which resulted in a net loss on the sale
of approximately $21,000.
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 annual base rent from $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 pre-petition and post-
petition rents due of $75,775 and the Partnership's related
administrative and legal expenses. However, due to the
uncertainty of collection, the Partnership has not accrued any of
these amounts for financial reporting purposes.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Rally's properties was approximately $270,000. In the fourth
quarter of 1997, a charge to operations for real estate
impairment of $220,500 was recognized, which is the difference
between the book value at December 31, 1997 of $490,500 and the
estimated fair value of $270,000. The charge was recorded
against the cost of the building and equipment.
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
1996 rent income and real estate taxes due and a portion of the
real estate taxes due in 1997. In 1997, the Partnership took
possession of the property and listed it for sale or lease. The
Partnership was scheduled to receive, but did not collect,
$59,160 and $56,884 in rent in the first six months of 1998 and
1997, respectively. These amounts were not accrued for financial
reporting purposes. While the property is vacant, the
Partnership is responsible for real estate taxes and other costs
required to maintain the property.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Brownsville property was approximately $466,600. In the fourth
quarter of 1997, a charge to operations for real estate
impairment of $239,600 was recognized, which is the difference
between the book value at December 31, 1997 of $706,200 and the
estimated fair value of $466,600. The charge was recorded
against the cost of the land and building.
During the six months ended June 30, 1998 and 1997, the
Partnership paid Partnership administration expenses to
affiliated parties of $131,137 and $134,031, 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 $34,428 and $49,747, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs. The decrease
in these expenses in 1998, when compared to 1997, is the result
of expenses incurred in 1997 related to the Sizzler and Rally's
situations discussed above.
As of June 30, 1998, the Partnership's annualized cash
distribution rate was 6.1%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants due to inflation and real sales growth, will result
in an increase in rental income over the term of the Leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. AEI is currently analyzing its
computer hardware and software systems to determine what, if any,
resources need to be dedicated regarding Year 2000 issues. The
Partnership does not anticipate any significant operational
impact or incurring material costs as a result of AEI becoming
Year 2000 compliant.
Liquidity and Capital Resources
During the six months ended June 30, 1998, the
Partnership's cash balances decreased $1,417,009 mainly as a
result of cash used to purchase additional properties. Net cash
provided by operating activities increased from $545,933 in 1997
to $725,498 in 1998. The increase was due to an increase in
income and a decrease in expenses in 1998, and net timing
differences in the collection of payments from the lessees and
the payment of expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the six months ended June
30, 1997, the Partnership generated cash flow from the sale of
real estate of $1,553,191. During the six months ended June 30,
1998, the Partnership expended $1,541,787 to invest in real
properties (inclusive of acquisition expenses) as the Partnership
reinvested cash generated from property sales.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through December 31, 1997, the Partnership sold 94.1709%
of the Applebee's restaurant in Destin, Florida in seven separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,413,627 which resulted in
a total net gain of $481,379. The total cost and related
accumulated depreciation of the interests sold was $1,053,565 and
$121,317, respectively. For the six months ended June 30, 1997,
the net gain was $153,716.
Through December 31, 1997, the Partnership sold 90.6301%
of a Taco Cabana restaurant in San Antonio, Texas in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,520,182 which
resulted in a total net gain of $562,654. The total cost and
related accumulated depreciation of the interests sold was
$1,043,983 and $86,455, respectively. For the six months ended
June 30, 1997, the net gain was $69,649.
Through December 31, 1997, the Partnership sold 77.4842%
of its interest in the Tractor Supply Company in Bristol,
Virginia in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds of
$1,189,572 which resulted in a total net gain of $217,301. The
total cost and related accumulated depreciation of the interests
sold was $997,602 and $25,331, respectively. For the six months
ended June 30, 1997, the net gain was $72,607.
Through December 31, 1997, the Partnership sold 26.0312%
of its interest in the Champps Americana restaurant in Columbus,
Ohio in three separate transactions to unrelated third parties.
The Partnership received total net sale proceeds of $807,777
which resulted in a total net gain of $151,139. The total cost
and related accumulated depreciation of the interests sold was
$667,813 and $11,175, respectively. For the six months ended
June 30, 1997, the net gain was $80,490.
During the six three months of 1997, the Partnership
distributed $60,467 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 $2.75 per
Limited Partnership Unit.
On July 30, 1997, the Partnership purchased a Fuddrucker's
restaurant in Thornton, Colorado for $1,405,771. The property is
leased to Fuddrucker's, Inc. under a Lease Agreement with a
primary term of 20 years and annual rental payments of $148,387.
On December 23, 1997, the Partnership purchased a 23.95%
interest in a parcel of land in Troy, Michigan for $361,889. The
land is leased to Champps Entertainment, Inc. (Champps) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $25,332. Effective June 20, 1998, the annual rent
was increased to $37,998. Simultaneously with the purchase of
the land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to
Champps for the construction of a Champps Americana restaurant on
the site. Through June 30, 1998, the Partnership had advanced
$417,607 for the construction of the property and was charging
interest on the advances at a rate of 7%. Effective June 20,
1998, the interest rate was increased to 10.5%. The
Partnership's share of the total purchase price, including the
cost of the land, will be approximately $1,077,750. After the
construction is complete, the Lease Agreement will be amended to
require annual rental payments of approximately $113,000. The
remaining interests in the property are owned by AEI Real Estate
Fund XV Limited Partnership, AEI Real Estate Fund XVII Limited
Partnership, and AEI Net Lease Income & Growth Fund XIX Limited
Partnership, affiliates of the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In January, 1998, the Partnership entered into an
agreement to purchase a 45% interest in a Tumbleweed restaurant
in Chillicothe, Ohio. On April 13, 1998, the Partnership
purchased its share of the land for $216,915. The land is leased
to Tumbleweed, LLC (TLLC) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $18,438.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership will advance funds to TLLC for the construction of a
Tumbleweed restaurant on the site. Through June 30, 1998, the
Partnership had advanced $70,688 for the construction of the
property and was charging interest on the advance at a rate of
8.5%. The Partnership's share of the total purchase price,
including the cost of the land, will be approximately $610,650.
After the construction is complete, the Lease Agreement will be
amended to require annual rental payments of approximately
$62,600. The remaining interests in the property are owned by
the Individual General Partner and AEI Net Lease Income & Growth
Fund XIX Limited Partnership, affiliates of the Partnership.
In April, 1998, the Partnership entered into an agreement
to purchase a Tumbleweed restaurant in Columbus, Ohio. On May 1,
1998, the Partnership purchased the land for $503,832. The land
is leased to TLLC under a Lease Agreement with a primary term of
15 years and annual rental payments of $42,826. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership will
advance funds to TLLC for the construction of a Tumbleweed
restaurant on the site. Through June 30, 1998, the Partnership
had advanced $34,200 for the construction of the property and was
charging interest on the advances at a rate of 8.5%. The total
purchase price, including the cost of the land, will be
approximately $1,490,000. After the construction is complete,
the Lease Agreement will be amended to require annual rental
payments of approximately $153,000.
In April, 1998, the Partnership entered into an Agreement
to purchase an Old Country Buffet restaurant to be constrructed
in Northlake, Illinois. On May 18, 1998, the Partnership
purchased the land for $330,000. The Partnership is charging
interest on the land at a rate of 10% until the building is
completed. The total purchase price will be approximately
$1,300,000. After the construction is complete, the Partnership
will pay approximately $970,000 of the construction costs. The
remainder of the construction costs will be paid by the tenant.
The property is leased to OCB Realty Co. under a Lease Agreement
with a primary term of 20 years and annual rental payments of
approximately $130,000, which begin after construction is
completed.
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. Prior to 1998,
redemption payments were paid to redeeming Partners in the fourth
quarter of each year. Beginning in 1998, redemption payments
will be paid to redeeming Partners on a quarterly basis. 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.
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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On April 1, 1998, six Limited Partners redeemed a total of
161.0 Partnership Units for $128,961 in accordance with the
Partnership Agreement. On July 1, 1998, nineteen Limited
Partners redeemed a total of 199.0 Partnership Units for
$159,399. The Partnership acquired these Units using Net Cash
Flow from operations. In prior years, a total of sixty-eight
Limited Partners redeemed 1,295.52 Partnership Units for
$1,028,771. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis
contains various "forward looking statements" within the meaning
of federal securities laws which represent management's
expectations or beliefs concerning future events, including
statements regarding anticipated application of cash, expected
returns from rental income, growth in revenue, taxation levels,
the sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward
looking statements made by the Partnership, must be evaluated in
the context of a number of factors that may affect the
Partnership's financial condition and results of operations,
including the following:
<bullet> Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
<bullet> the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for investors;
<bullet> resolution by the General Partners of conflicts with
which they may be confronted;
<bullet> the success of the General Partners of locating
properties with favorable risk return characteristics;
<bullet> the effect of tenant defaults; and
<bullet> the condition of the industries in which the tenants of
properties owned by the Partnership operate.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.OTHER INFORMATION
None.
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Purchase Agreement dated May 12,
1998 between the Partnership, AEI Real
Estate Fund 86-A Limited Partnership and
Unlimited Development, P.L.L. relating to
the property at 950 W. Central Avenue,
Springboro, Ohio.
10.2 Assignment of Lease dated May 18,
1998 between the Partnership and Alpha
Group, LLC relating to the property at
North Avenue and Wolf Road, Northlake,
Illinois.
27 Financial Data Schedule for period
ended June 30, 1998.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: July 31, 1998 AEI Real Estate Fund XVIII
Limited Partnership
By: AEI Fund Management XVIII, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
PURCHASE AGREEMENT
Springboro, Ohio
This AGREEMENT, entered into effective as of the 12th of
May, 1998.
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership and AEI Real Estate 86-A Limited Partnership
("Seller"). Seller holds an undivided 100% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Property"). Buyer is Unlimited
Development, P.L.L., a general partnership having limited
liability organized under the laws of the state of Ohio,
("Buyer"). Seller wishes to sell and Buyer wishes to buy the
Property.
2. Property. The Property to be sold to Buyer in this
transaction is legally described on Exhibit A attached hereto,
subject to all easements, covenants, conditions, restrictions and
agreements of record that do not affect marketability of title or
affect adversely the use of the Property ("Permitted
Exceptions"), subject to the provisions of Buyer review of title
as set forth below in paragraph 8.
3. Purchase Price. The purchase price for this Property is
$400,000.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) Upon receipt of an executed copy of this Agreement,
Buyer will Deposit $10,000 (the "First Payment") with Escrowee
Lawyer's Title of Cincinnati, Inc. 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 pay the balance of the purchase price for the
Property, $390,000 in cash or good funds (the "Second Payment")
at closing to the ("Escrowee") who shall close the transaction
according to the terms hereof.
5. Closing Date. Escrow shall close on or before June 1, 1998.
6. Due Diligence. Buyer will have until May 25, 1998 (the
"Review Period"), to conduct all of its inspections and due
diligence and satisfy itself regarding title to the Property, and
to inspect the Property. Buyer agrees to indemnify and hold
Seller harmless for any loss or damage to the Property or persons
caused by Buyer or its agents arising out of such physical
inspections of the Property. Buyer expressly acknowledges that
the sale of the Property as provided for herein is made on an "AS
IS" basis, and such provision shall survive closing.
Delivered to Buyer herewith upon execution by Seller are the
following documents such as are in Seller's possession. Seller
makes no independent representation or warranty as to the
accuracy of the information supplied herewith prepared by third
parties; however, Seller does not know that such information is
inaccurate.
(A) All environmental studies and reports in the possession
of Seller;
(B) A copy of the existing survey of the Property in the
possession of Seller;
(C) A copy of the existing title policy in the possession
of Seller;
On or before May 18, 1998, after the execution and delivery
of this Agreement, Seller shall deliver to Buyer the following:
(A) The title commitment referenced in paragraph 8 below;
(B) A revised survey prepared in accordance with ALTA
survey standards by a surveyor reasonably acceptable to Buyer;
(C) Any contracts, leases, permits, and licenses (in the
possession of Seller, if any) affecting the Property.
In the event that Buyer does not close on this transaction,
all reasonable costs which Seller has incurred with respect to
updating title and survey shall be reimbursed to Seller by Buyer
immediately upon presentation of reasonable evidence of such
costs.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice by certified mail,
return receipt requested, or by personal delivery to Seller and
escrow holder before the expiration of the Review Period. Such
notice shall be deemed effective when transmitted (as defined by
Subparagraph 18(d)) to Seller. If this Agreement is not canceled
as set forth herein, 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 title insurance and/or escrow
cancellation fees and any liabilities under the first paragraph
of Section 6 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.
Unless Seller shall be in default of any obligation
hereunder, or this Agreement is canceled by Buyer pursuant to the
terms hereof. If this Agreement is not canceled, all of Buyer's
conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Buyer and the First
Payment shall be deposited by Buyer with Escrowee Lawyer's Title
of Cincinnati, Inc. ("Escrowee"). 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
nationally recognized title company selected by Seller, subject
to the approval of Buyer's lender or mortgagee, 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 marketable and insurable fee simple title to the
Property subject only to: the Permitted Exceptions as defined in
paragraph 2 above; current real property taxes and assessments;
and, survey exceptions.
Buyer shall be allowed until the expiration of the Review
Period for examination of the commitment and the making of any
objections to marketability of title thereto, or that an
exception to title adversely affects the use of the Property,
said objections to be made in writing or deemed waived. Buyer
shall provide Seller with a copy of said title commitment. If
any objections thereto are so made by Buyer, the Seller shall be
allowed ten (10) days to make such title marketable or cure
Buyer's objections, or in the alternative to obtain a commitment
for insurable title insuring over Buyer's objections. If Seller
shall decide to make no efforts to make title marketable, or is
unable to make title marketable or obtain insurable title, (after
execution by Buyer of such documents reasonably requested by
Seller to evidence the termination hereof) Buyer's First Payment
shall be returned and this agreement shall be null and void and
of no further force and effect. In such event, Buyer shall have
no liability for the funds expended by Seller for all reasonable
costs incurred with respect to updating title and survey as set
forth in Paragraph 6 and Seller shall be responsible for all
Escrow Fees charged in connection with this Agreement.
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.
If Buyer shall make no written objection to Seller within
the Review Period setting forth Buyer's objections to the status
of title, Buyer shall have been deemed to have waived any such
objections.
9. Closing Costs. Seller will pay the real property transfer
tax and conveyance fees and one-half of escrow fees, and any
brokerage commissions payable except those brokerage commissions
incurred by Buyer. Seller shall pay for the cost of issuing the
title commitment, and will pay the cost of the title insurance
premium for an Owner's policy, (if Buyer shall decide to purchase
the same). Buyer shall pay all recording fees, one-half of the
escrow fees, and the cost of any special endorsements to the
title policy as may be required by Buyer. Each party will pay
its own attorneys' fees and costs to document and close of this
transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
Seller represents that 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. Responsibility for real
estate taxes and special assessments shall be prorated as of the
date of closing based upon the most recently available tax bill
with no readjustment for the taxes due for the year in which
closing shall occur. All real estate taxes and special
assessments due and payable in the years following the year in
which closing occurs shall otherwise be the responsibility of
Buyer.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) The Property is not subject to any leases.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property that have not been disclosed to Buyer.
(iii) Seller has not executed any contracts that would be
binding on Buyer after the closing date.
(iv) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by Seller,
Seller 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 Buyer
or the Title Company may require and Buyer deems to be reasonable
in order to consummate the transactions contemplated herein.
(v) Seller 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.
(vi) To Seller'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 Seller is a party or
by which Seller is bound.
(vii) Seller agrees to indemnify and hold Buyer harmless
from any and all claim of any persons or entities claiming a
brokerage or other fee arising out of representation of Seller or
through or on behalf of Seller.
(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 consent will not be
unreasonably withheld or delayed.
(c) The provisions of this paragraph (11) shall survive
closing.
12. Disclosures.
(a) 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
ground water 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 Proper
ty or the migration of Hazardous Materials from or to other
property and there are no underground storage tanks on the
Property. Except as otherwise provided in this Agreement and
except to the extent that Seller has knowledge of any hazardous
substances or materials on or in connection with the Property
which Seller is not disclosing to Buyer hereunder, 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.
(b) Subject to Seller's representations contained in the
Agreement, including subparagraph 12(a) above, Buyer agrees that
it shall be purchasing the Property in its then present
condition, as is, where is, and Seller has no obligations to con
struct or repair any improvements thereon or to perform any other
act regarding the Property, except as expressly provided herein.
(c) Buyer acknowledges that, having been given the
opportunity to inspect the Property 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 expressly
acknowledges that, in consideration of the agreements of Seller
herein, except as otherwise specified herein, Seller makes no war
ranty 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, profitability or fitness
for a particular purpose, in respect of the Property.
The provisions (a) through (c) shall survive closing.
13. Closing.
(a) Before the Closing Date, Seller will deposit into
escrow a standard Seller's Affidavit regarding liens and
judgments and an executed limited warranty deed conveying
insurable title of the Property to Buyer, subject to the
Permitted Exceptions, and will provide Buyer with an affidavit
that Seller is not a "foreign person", and a customary owner's
affidavit requested by the Escrowee (limited where reflective of
the state of Seller's knowledge and belief) for purposes of
deleting the standard exceptions.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required under
paragraph 4; any additional funds required of Buyer, (pursuant to
this agreement or any other agreement executed by Buyer) to close
escrow. Both parties will sign and deliver to the escrow holder
any other documents reasonably required by the escrow holder to
close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the official
records of the county where the Property is located; cause the
title company to commit to issue the title policy; immediately
deliver to Seller the portion of the purchase price deposited
into escrow by cashier's check or wire transfer (less debits and
prorations, if any); deliver to Seller and Buyer a signed coun
terpart 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 the First Payment heretofore paid by
the Buyer. Such sum being agreed on as liquidated damages for
the failure of Buyer to perform the duties, liabilities, and
obligations imposed on it by the terms and provisions of this
Agreement. Seller agrees to accept and take said cash payment as
its total damages and relief and as Seller's sole remedy
hereunder in such event.
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 hin
der, delay or prevent any other sale, lease or other transaction
involving the Property (any and all of which will be null and
void), unless: it has paid the First Payment, performed all of
its other obligations and satisfied all conditions under this
Agreement, and unconditionally notifies Seller that it stands
ready to tender full performance, purchase the Property and close
escrow as per this Agreement. Provided, however, that in no
event shall Seller be liable for any punitive, consequential or
speculative damages arising out of any default by Seller
hereunder.
15. Buyer's Representations and Warranties.
Buyer represents and warrants to Seller as follows:
(i) 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.
(ii) 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.
(iii) Buyer agrees to indemnify and hold Seller harmless
from any and all claim of any persons or entities claiming a
brokerage or other fee arising out of representation of Buyer.
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
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, and the First Payment shall be returned to
Buyer. 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 16 (a) for
Buyer to elect to terminate this Agreement has expired or Buyer
has, by written notice to Seller, waived Buyer's right to
terminate this Agreement. If Buyer elects to proceed and to
consummate the purchase despite said damage or destruction, there
shall be no reduction in or abatement of the purchase price, and
Seller shall assign to Buyer the Seller's right, title, and
interest in and to all insurance proceeds resulting from said
damage or destruction to the extent that the same are payable
with respect to damage to the Property. If the cost of repair is
less than $10,000.00, Buyer shall be obligated to otherwise
perform hereunder 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.
(b) If, prior to closing, the Property, or any part
thereof, is taken (other than as disclosed in writing to Buyer
prior to the date of this Agreement) by eminent domain, this
Agreement shall become null and void, at Buyer's option. If
Buyer elects to proceed and to consummate the purchase despite
said taking, there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer all the Seller's
right, title, and interest in and to any award made, or to be
made, in the condemnation proceeding.
In 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). In such event, Buyer shall have no
liability for the funds expended by Seller for all reasonable
costs incurred with respect to updating title and survey as set
forth in Paragraph 6 and Seller shall be responsible for all
Escrow Fees charged in connection with this Agreement.
17. 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.
18. 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 con
taining 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. Buyer has the right to assign
this Agreement to another party without Seller's consent, but
shall not be binding upon Seller until receipt of written notice
thereof, and provided, further, that Buyer shall remain liable
for the obligations of Buyer hereunder until the same are
fulfilled or this Agreement is terminated according to the
provisions hereof.
(b) If escrow has not closed through no fault of Seller, by
July 1, 1998, Seller may either, at its election, extend the
closing date or exercise any remedy available to it by law,
including termination of this Agreement.
(c) All Funds to be deposited or paid by Buyer, after the
First Payment will be good and clear funds in the form of cash,
cashier's checks or wire transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have been
duly given or served if sent by first class certified mail,
return receipt requested, postage prepaid, or by a nationally
recognized courier service guaranteeing overnight delivery to the
party at his or its address set forth below, or to such other
address as such party may hereafter designate by written notice
to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Fund 86-A Limited Partnership
AEI Real Estate Fund XVIII Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
with copy to:
Michael B. Daugherty
Attorney at Law
1300 Minnesota World Trade Center
St. Paul, MN. 55101
If to Buyer:
Unlimited Development, P.L.L.,
ATTENTION: Mr. James Smyth
C/O Smyth Automotive
4275 Mount Carmel Tobassco Road
Cincinnati, Ohio 45244
with copy to:
Mr. James Thompson
Attorney at Law
7434 Jager Court
Cincinnati, Ohio 45230
19. Acceptance. 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 and Escrowee (along with
the First Payment to Escrowee. Seller has three (3) business
days after receipt of the executed offer within which to accept
this offer and to notify James W. Thompson, attorney for Buyer,
as provided in subparagraph 18d by returning two executed copies
of this Agreement. Upon receipt of the two executed copies,
James W. Thompson will deposit the First Payment and one executed
copy of the Agreement with the Escrow Agent.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER:
Signed in the Presence of: Unlimited Development, P.L.L.
/s/ James W Thompson By: /s/ James E Smyth
Print Name: James W Thompson Print Name: James E Smyth
/s/ Angela D Ruby Office Held: Gen Partner
Print Name: Angela D Ruby
SELLER:
Signed in the Presence of: AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP, a Minnesota limited
partnership.
By: AEI Fund Management XVIII, Inc.,
its corporate general partner
/s/ Brian K Schulz By: /s/ Robert P Johnson
Print Name: Brian K Schulz Robert P. Johnson,
President
/s/ Sadie-jo D Hansen
Print Name: Sadie-jo D Hansen
Signed in the Presence of: AEI REAL ESTATE FUND 86-A LIMITED
PARTNERSHIP, a Minnesota limited
partnership.
/s/ Brian K Schulz By: AEI Fund Management XVIII, Inc.,
its corporate general partner
By:/s/ Robert P Johnson
Print Name: Brian K Schulz Robert P. Johnson,
President
/s/ Sadie-jo D Hansen
Print Name: /s/ Sadie-jo D Hansen
EXHIBIT "A"
LEGAL DESCRIPTION
Being Lot Number Two (2) as the same is known and designated
on the Record plan of Springboro Crossings, a subdivision of
lands and lots as described in Plat Book "20", page 96 of the
Warren County Plat Records.
Together with a 45-foot-wide access utility and drainage
easement across the southerly portion of the subject premises as
shown in Plat Book "20", page 96 of the Warren County Plat
Records, and
Together with perpetual and non-exclusive ingress and egress
easement granted pursuant to Warranty Deed dated December 18,
1989 and recorded in Official Records 541, page 421 of the Warren
County Recorder.
FIRST AMENDMENT AND ADDENDUM TO
REAL ESTATE PURCHASE AGREEMENT
This Amendment to the PURCHASE AGREEMENT ( "Agreement") is made
as of the 14th day of July, 1998, by and between AEI REAL ESTATE FUND
XVIII LIMITED PARTNERSHIP, a Minnesota limited partnership and AEI
REAL ESTATE FUND 86-A LIMITED PARTNERSHIP, a Delaware limited
partnership.,("SELLER"), UNLIMITED DEVELOPMENT, P.L.L., AN OHIO
GENERAL PARTNERSHIP HAVING LIMITED LIABILITY, ("BUYER").
WHEREAS, SELLER AND BUYER entered into the AGREEMENT on May 12,
1998;
WHEREAS, BUYER gave notice of cancellation dated the 10th day of
June, 1998 pursuant to Section 6 of the Agreement; and
WHEREAS, SELLER and BUYER desire to proceed with the Agreement
upon the following amended terms and agreements.
NOW, THEREFORE, in consideration of the premises, covenants and
mutual agreements contained herein, the parties agree as follows:
1. Section 3 of the AGREEMENT dated May 12th, 1998 is stricken in
its entirety and the following is substituted therefor:
"3. Purchase Price. The purchase price for this Property is
$405,000."
2. Section 4 of the AGREEMENT dated May 12th, 1998 is stricken in
its entirety and the following is substituted therefor:
"4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) Upon receipt of an executed copy of this Agreement,
Buyer will Deposit $10,000 (the "First Payment") with Escrowee
Lawyer's Title of Cincinnati, Inc. 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 pay the balance of the purchase price for the
Property, $395,000 in cash or good funds (the "Second Payment") at
closing to the ("Escrowee") who shall close the transaction according
to the terms hereof."
3. Section 5 of the AGREEMENT dated May 12th, 1998 is stricken in
its entirety and the following is substituted therefor:
1. Closing Date. Escrow shall close on or before July 21, 1998."
4. Closing Contingency. Buyer's obligation to close pursuant to
this Agreement is contingent upon Seller delivering to Escrow Agent on
or before Closing fully executed copies in recordable form of the
"AGREEMENT FOR PARTIAL RELEASE OF DEED RESTRICTION" between Seller
and The Standard Oil Company as previously supplied to Buyer's counsel
on June 30, 1998. If Seller does not deliver said agreement copies to
Escrow Agent as set forth herein, then this Amendment to Agreement
shall be null, void and of no further effect and the parties shall be
restored to their legal positions as if this FIRST AMENDMENT AND
ADDENDUM TO REAL ESTATE PURCHASE AGREEMENT had not been entered into.
5. Expiration of Offer. The date of this Agreement represents the
date of execution by BUYER. If SELLER does not simultaneously execute
this Agreement, then this Agreement shall be deemed an Offer to Amend.
In such an event, SELLER shall have forty eight (48) hours to return a
fully executed copy of this Agreement to BUYER'S Counsel, James W.
Thompson, 7434 Jager Court, Cincinnati, Ohio 45230 as provided in
subparagraph 18d of the AGREEMENT. If SELLER shall fail to deliver a
fully executed copy of this FIRST AMENDMENT AND ADDENDUM TO REAL
ESTATE PURCHASE AGREEMENT to BUYER'S Counsel within said period of
time, then this Agreement shall become null, void and of no further
force and effect.
In all other respects, the Agreement is hereby ratified and
confirmed and it is the intent of the parties to continue the
Agreement, as modified by this Amendment, in full force and effect.
IN WITNESS WHEREOF, BUYER and SELLER have executed this First
Amendment and Addendum to the Agreement as of the date first above
written.
BUYER:
Signed in the Presence of: Unlimited Development, P.L.L.
/s/ Lynette Smithson By: /s/ James E Smyth
Print Name: Lynette Smithson Print Name: James E Smyth
/s/ David E Rich Office Held: Partner
Print Name: David E Rich
SELLER:
Signed in the Presence of: AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP, a Minnesota limited
partnership.
By: AEI Fund Management XVIII, Inc.,
its corporate general partner
/s/ Brian K Schulz By: /s/ Robert P Johnson
Print Name: Brian K Schulz Robert P. Johnson, President
/s/ Sadie-jo D Hansen
Print Name: Sadie-jo D Hansen
Signed in the Presence of: AEI REAL ESTATE FUND 86-A LIMITED
PARTNERSHIP, a Delaware limited
partnership.
By: AEI Fund Management 86-A, Inc.,
its corporate general partner
/s/ Brian K Schulz By: /s/ Robert P Johnson
Print Name: Brian K Schulz Robert P. Johnson, President
/s/ Sadie-jo D Hansen
Print Name:Sadie-jo D Hansen
ASSIGNMENT OF LEASE
THIS ASSIGNMENT, made this 18th day of May 1998, by Alpha
Group, LLC., whose address is 1209 North Walton Boulevard,
Bentonville, Arkansas (herein called "Assignor") to AEI Real
Estate Fund XVIII Limited Partnership, whose address is 1300
Minnesota World Trade Center, St. Paul, Minnesota 55101 (herein
called "Assignee"), WITNESSETH:
FOR VALUE RECEIVED, Assignor hereby grants, transfers and
assigns to Assignee all of the right, title and interest of
Assignor in and to that certain lease by and between Assignor and
OCB Realty Co., dated March 31, 1998, (the same constituting all
of the written leases affecting the Premises as herein after
defined)(said lease hereinafter being referred to as the
"Lease"), which Lease demises all of the real estate ("Premises")
described in Exhibit A attached hereto, together with any and all
extensions and renewals thereof, together with the immediate and
continuing right to collect and receive all rents, income,
payments and profits arising out of said Lease or out of the
Premises or any part thereof ("Rents"), together with the right
to all proceeds payable to Assignor pursuant to any purchase
options on the part of Tenant under the Lease, together with all
payments derived therefrom, if any, including but not limited to
future claims for the recovery of damages done to the Premises or
for the abatement of any nuisance existing thereon, future claims
for damages resulting from default under said Lease whether
resulting from acts of insolvency or acts of bankruptcy or
otherwise, and lump sum payments for the cancellation of said
lease or the waiver of any obligation or term thereof prior to
the expiration date and the return of any insurance premiums or
ad valorem tax payments made in advance and subsequently
refunded, together with the rights accruing under that certain
Guarantee of Lease by Buffetts, Inc., of even date with the
Lease;
AND ASSIGNOR FURTHER AGREES, ASSIGNS AND COVENANTS:
1. Representations. Assignor represents and warrants that
it is now the absolute owner of said Lease with full right and
title to assign the same and the Rents; that said Lease is valid,
in full force and effect and has not been modified or amended
except as disclosed to Assignee; that there are no outstanding
assignments or pledges thereof; that there are no existing
defaults under the provisions thereof on the part of any party to
the Lease; that no Rents have been waived, anticipated,
discounted, compromised or released; and that Tenant has no
defenses, setoffs, or counterclaims against Assignor.
2. Present Assignment. This Assignment shall constitute a
perfected, absolute and present assignment.
3. No Liability For Assignee. The Assignee shall not be
obligated to perform or discharge, nor does it hereby undertake
to perform or discharge any obligation, duty or liability under
said Lease incurred prior to the date hereof nor shall this
Assignment operate to place responsibility for the control, care,
management or repair of the Premises prior to the date hereof
upon the Assignee nor for the carrying out of any of the terms
and conditions of said Lease; nor shall it operate to make the
Assignee responsible or liable for any waste committed on the
Premises, or for any dangerous or defective condition of the
Premises, or for any negligence in the management, upkeep, repair
or control of said Premises, prior to the date hereof resulting
in loss or injury or death to any tenant, licensee, employee or
stranger nor liable for laches or failure to collect the rents
and Assignee shall be required to account only for such moneys as
are actually received by it.
4. Assignor Hold Assignee Harmless. The Assignor shall
and does hereby agree to indemnify and to hold Assignee harmless
of and from any and all liability, loss or damage which it may or
might incur under said Lease or under or by reason of this
Assignment, of and from any and all claims and demands whatsoever
which may be asserted against it by reason of any alleged
obligations or undertakings on Assignee's part to perform or
discharge any of the terms, covenants or agreements contained in
said Lease prior to the date hereof. Should the Assignee incur
any such liability, or in the defense of any such claims or
demands, the amount thereof, including costs, expenses, and
reasonable attorney's fees, Assignor shall reimburse the
Assignee therefor immediately upon demand.
5. Assignee Hold Assignor Harmless. The Assignee shall
and does hereby agree to indemnify and to hold Assignor harmless
of and from any and all liability, loss or damage which it may or
might incur under said Lease or under or by reason of this
Assignment and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any
alleged obligations or undertakings on Assignor's part to perform
or discharge any of the terms, covenants or agreements contained
in said Lease on or after the date hereof. Should the Assignor
incur any such liability, or in the defense of any such claims or
demands, the amount thereof, including costs, expenses, and
reasonable attorney's fees, Assignee shall reimburse the
Assignor therefor immediately upon demand.
6. Security Deposits. The Assignor represents that there
are no security deposits held by Assignor under the terms of the
Lease(s).
7. Authorization To Tenant. The Tenant under the Lease is
hereby irrevocably authorized and directed to recognize the
claims of Assignee hereunder. Assignor hereby irrevocably
directs and authorizes the Tenant to pay to Assignee all sums due
under the Lease and consents and directs that said sums shall be
paid to Assignee. The sole signature of the Assignee shall be
sufficient for the exercise of any rights under this Assignment
and the sole receipt of the Assignee for any sums received shall
be a full discharge and release therefor to any such Tenant or
occupant of the Premises. Checks for all or any part of the
rentals collected under this Assignment shall upon notice from
the Assignee be drawn to the exclusive order of the Assignee.
8. Successors And Assigns. This Assignment and each and
every covenant, agreement and provision hereof shall be binding
upon the Assignor and its successors and assigns including
without limitation each and every from time to time record owner
of the Premises or any other person having an interest therein
and shall inure to the benefit of the Assignee and its successors
and assigns. As used herein the words "successors and assigns"
shall also be deemed to mean the heirs, executors,
representatives and administrators of any natural person who is a
party to this Assignment.
9. Governing Law. This Assignment is intended to be
governed by the laws of the State of Illinois.
IN WITNESS WHEREOF, the Assignor and Assignee have caused
this Assignment of Lease to be executed as of the date first
above written.
ALPHA GROUP, LLC
By: /s/ Robert E Holmer
Robert E Holmer, Member
[Print Name]
STATE OF Arkansas )
)SS.
COUNTY OF Benton)
The foregoing instrument was acknowledged before me the 12th
day of May, 1998, by Robert E Holmer, Member of Alpha Group,
LLC, on behalf of said limited liability partnership.
/s/ Gay L Fejleh
Notary Public
[notary seal]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI FUND MANAGEMENT XVIII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 18th
day of May, 1998, by Robert P. Johnson, the President of AEI
Fund Management XVIII, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XVIII Limited
Partnership, on behalf of said limited partnership.
/s/ Laura M Steidl
Notary Public
[notary seal]
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000840459
<NAME> AEI REAL ESTATE FUND XVIII LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,796,274
<SECURITIES> 0
<RECEIVABLES> 39,356
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,835,630
<PP&E> 14,430,578
<DEPRECIATION> (2,244,275)
<TOTAL-ASSETS> 15,021,933
<CURRENT-LIABILITIES> 313,170
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,708,763
<TOTAL-LIABILITY-AND-EQUITY> 15,021,933
<SALES> 0
<TOTAL-REVENUES> 820,779
<CGS> 0
<TOTAL-COSTS> 311,804
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 508,975
<INCOME-TAX> 0
<INCOME-CONTINUING> 508,975
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 508,975
<EPS-PRIMARY> 23.54
<EPS-DILUTED> 23.54
</TABLE>
