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, 1998
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)
(651) 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, 1998 were
$1,747,913.
As of February 28, 1999, there were 20,910.48 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 $20,910,480.
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. Prior to
commencing the liquidation of the Partnership, the General
Partners may reinvest the proceeds from the sale of properties in
additional properties, provided that sufficient proceeds are
distributed to the Limited Partners to pay federal and state
income taxes related to any taxable gain recognized as a result
of the sale. 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 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 four 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 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.
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 $350,635,
which resulted in a net loss on the sale of $22,345.
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 $77,025 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.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
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 re-lease.
The Partnership was scheduled to receive, but did not collect,
$99,388 and $115,285 in rent in 1998 and 1997, respectively.
This amount was not accrued for financial reporting purposes.
While the property was vacant, the Partnership was 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.
On November 18, 1998, the Partnership re-leased the
Brownsville property to Sergio Gonzalez under a Lease Agreement
with a primary term of two years and annual rental payments of
$37,200. The property is now operated as a Taco Fiesta
restaurant.
The Partnership used the majority of proceeds from two
property sales in 1995 to purchase two properties in 1996, as
discussed below. The remainder of the proceeds from those 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, 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 years ended December 31, 1997
and 1996, the net gain was $320,171 and $124,583, respectively.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
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 years ended
December 31, 1997 and 1996, the net gain was $355,897 and
$206,757, respectively.
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 years ended
December 31, 1997 and 1996, the net gain was $179,517 and
$37,784, respectively.
During 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.
Subsequent to December 31, 1998, the Partnership sold its
24% interest in the HomeTown Buffet restaurant in three separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of approximately $437,000 which
resulted in a net gain of approximately $160,000.
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 advanced funds to Champps
for the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective June 20, 1998, the
interest rate was increased to 10.50%. On September 3, 1998,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $122,605. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $1,192,496. 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 1. DESCRIPTION OF BUSINESS. (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, Inc. (TWI) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $18,438.
Effective August 10, 1998, the annual rent was increased to
$22,234. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement under
which the Partnership advanced funds to TWI for the construction
of a Tumbleweed restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of 8.5%.
Effective August 10, 1998, the interest rate was increased to
10.25%. On November 20, 1998, after the development was
completed, the Lease Agreement was amended to require annual
rental payments of $57,314. The Partnership's share of the total
acquisition costs, including the cost of the land, was $573,831.
The remaining interests in the property are owned by the
Individual General Partner and AEI Net Lease Income & Growth Fund
XIX Limited 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 TWI under a Lease Agreement with a primary term of
15 years and annual rental payments of $42,826. Effective August
28, 1998, the annual rent was increased to $51,643.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership advanced funds to TWI for the construction of a
Tumbleweed restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 8.5%. Effective
August 28, 1998, the interest rate was increased to 10.25%. On
December 28, 1998, after the development was completed, the
Partnership assigned, for diversification purposes, 60% of its
interest in the property to an affiliated Partnership and the
Lease Agreement was amended to require annual rental payments of
$55,401. The Partnership's share of the total acquisition costs,
including the cost of the land, was $554,269. The remaining
interest in the property is owned by AEI Net Lease Income &
Growth Fund XIX Limited Partnership.
In April, 1998, the Partnership entered into an Agreement
to purchase an Old Country Buffet restaurant to be constructed in
Northlake, Illinois. On May 18, 1998, the Partnership purchased
the land for $330,000. The Partnership charged interest on the
land at a rate of 10% until September 27, 1998. On September 28,
1998, the tenant began paying annual rent of $130,000. On
September 30, 1998, the Partnership advanced $370,000 for the
construction of the property. On December 29, 1998, after the
construction was completed, the Partnership paid $639,000 of
additional construction costs. The total acquisition cost was
$1,350,804. The property is leased to OCB Realty Co. under a
Lease Agreement with a primary term of 20 years.
On August 28, 1998, the Partnership purchased a 38%
interest in a parcel of land in Centerville, Ohio for $703,376.
The land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $49,236. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through December 31, 1998, the Partnership had advanced
$439,301 for the construction of the property and was charging
interest on the advances at a rate of 7%. Effective December 25,
1998, the interest rate was increased to 10.5%. On January 27,
1999, after the development was completed, the Lease Agreement
was amended to require annual rental payments of $154,075. The
Partnership's share of the total acquisition costs, including the
cost of the land, was approximately $1,467,000. The remaining
interests in the property are owned by AEI Real Estate Fund XVII
Limited Partnership, AEI Income & Growth Fund XXI Limited
Partnership and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Major Tenants
During 1998, 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 65%
of the Partnership's total rental revenue in 1998. 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 1999 and future years. Any failure of these major tenants
could materially affect the Partnership's net income and cash
distributions.
Competition
The Partnership is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Partnership. At the time the Partnership
elects to dispose of its properties, the Partnership will be in
competition with other persons and entities to find buyers for
its properties.
Employees
The Partnership has no direct employees. Management
services are performed for the Partnership by AEI Fund
Management, Inc., an affiliate of AFM.
Year 2000 Compliance
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
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.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
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 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, 1998.
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
Children's World ARAMARK
Daycare Center Educational
Phoenix, AZ 9/29/89 $ 883,486 Resources, Inc. $ 114,627 $ 15.16
Pasta Fair Restaurant Pasta Fair of
Belleview, FL 4/11/90 $ 932,862 Belleview, Inc. $ 60,000 $ 9.84
Children's World ARAMARK
Daycare Center Educational
Blue Springs, MO 6/27/90 $ 791,271 Resources, Inc. $ 97,699 $ 12.21
Children's World ARAMARK
Daycare Center Educational
Lenexa, KS 9/13/90 $ 983,527 Resources, Inc. $ 121,741 $ 15.19
Taco Cabana Restaurant Texas Taco
San Antonio, TX 12/29/90 $1,406,426 Cabana L.P. $ 203,994 $ 74.50
Cheddar's Restaurant Heartland
Clive, IA 1/22/91 $1,392,248 Restaurant Corp. $ 210,888 $ 29.29
Children's World ARAMARK
Daycare Center Educational
Westerville, OH 6/21/91 $ 990,261 Resources, Inc. $ 120,865 $ 15.15
Taco Cabana Restaurant
San Antonio, TX Texas Taco
(9.3699%) 7/19/91 $ 107,933 Cabana L.P. $ 15,895 $ 37.91
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
Taco Fiesta Restaurant
Brownsville, TX 8/9/91 $ 799,938 Sergio Gonzalez $ 37,200 $ 13.78
Applebee's Restaurant
Destin, FL
(5.8291%) 11/1/91 $ 65,215 T.S.S.O., Inc. $ 8,875 $ 31.65
Children's World ARAMARK
Daycare Center Educational
Columbus, OH 8/10/92 $1,019,202 Resources, Inc. $ 124,260 $ 14.07
Rally's Restaurant New Red
San Antonio, TX 12/7/92 $ 303,640 Line, Inc. $ 15,000 $ 25.86
Rally's Restaurant Red Line San
San Antonio, TX 12/7/92 $ 308,997 Antonio One, LTD $ 15,000 $ 25.86
Applebee's Restaurant
Slidell, LA Gulf Coast
(27%) 5/5/93 $ 280,018 Restaurants, Inc.$ 42,602 $ 34.44
HomeTown Buffet Restaurant
Tucson, AZ Summit Family
(24%) 6/16/93 $ 303,733 Restaurants, Inc. $ 40,957 $ 17.73
Tractor Supply Company Store
Bristol, VA Tractor Supply
(7.5158%) 4/10/96 $ 96,765 Company, Inc. $ 10,516 $ 7.46
Champps Americana
Restaurant Americana
Columbus, OH Dining
(6.1688%) 8/29/96 $ 158,257 Corporation $ 17,402 $ 34.53
Fuddrucker's Restaurant
Thornton, CO 7/30/97 $1,405,771 Fuddrucker's, Inc.$ 148,387 $ 29.81
Champps Americana
Restaurant Champps
Troy, MI Entertainment,
(23.95%) 9/3/98 $1,192,496 Inc. $ 122,605 $ 46.16
Tumbleweed Restaurant
Chillicothe, OH Tumbleweed,
(45.0%) 11/20/98 $ 573,831 Inc. $ 57,314 $ 23.23
Tumbleweed Restaurant
Columbus, OH Tumbleweed,
(40.0%) 12/28/98 $ 554,269 Inc. $ 55,401 $ 25.26
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
Old Country Buffet
Restaurant OCB
North Lake, IL 12/29/98 $1,350,804 Restaurant Co. $ 130,000 $ 14.46
Champps Americana
Restaurant
Centerville, OH
(38.0%) Americana
(land only) (1) 8/28/98 $ 703,376 Dining Corp. $ 49,236 $ 13.83
</TABLE>
(1) The restaurant was under construction as of December 31,
1998.
The properties listed above with a partial ownership
percentage are owned with affiliates of the Partnership and/or
unrelated third parties. The remaining interest in the
Applebee's restaurant in Slidell, Louisiana is owned by AEI Real
Estate fund XVI Limited Partnership. The remaining interests in
the HomeTown Buffet restaurant are owned by AEI Net Lease Income
& Growth Fund XIX Limited Partnership and unrelated third
parties. The remaining interests in the Champps Americana
restaurant in Columbus, Ohio are owned by AEI Income & Growth
Fund XXI Limited Partnership and unrelated third parties. The
remaining interests in the Taco Cabana restaurant in San Antonio,
Texas, the Applebee's restaurant in Destin, Florida, and the
Tractor Supply Company store are owned by unrelated third
parties. The remaining interests in the Champps Americana
restaurant in Troy, Michigan 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. The remaining interests in the Tumbleweed
restaurant in Chillicothe, Ohio are owned by the Individual
General Partner and AEI Net Lease Income & Growth Fund XIX
Limited Partnership. The remaining interest in the Tumbleweed
restaurant in Columbus, Ohio is owned by AEI Net Lease Income &
Growth Fund XIX Limited Partnership. The remaining interests in
the Champps Americana restaurant in Centerville, Ohio are owned
by AEI Real Estate Fund XVII Limited Partnership, AEI Income &
Growth Fund XXI Limited Partnership and AEI Income & Growth Fund
XXII Limited Partnership.
The Partnership accounts for properties owned as tenants-
in-common with affiliated Partnerships and/or 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 financial statements reflect only this
Partnership's percentage share of the properties' land, building
and equipment, liabilities, revenues and expenses.
The initial Lease terms are for 20 years except for the
Taco Cabana restaurants in San Antonio, Texas, the Rally's
restaurants, the Tumbleweed restaurants, and the Children's World
daycare centers, which have Lease terms of 15 years and the
Tractor Supply Company store, 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 Americana,
Applebee's in Slidell, Louisiana, Fuddrucker's and Rally's
restaurants which have renewal options that may extend the Lease
term an additional 15 years and the Old Country Buffet restaurant
which has a renewal option that may extend the Lease term an
additional 20 years.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The General Partners believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.
For tax purposes, the Partnership's properties are
depreciated under the Modified Accelerated Cost Recovery System
(MACRS). The largest depreciable component of a property is the
building which is depreciated, using the straight-line method,
over 31.5 years 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 except for properties
whose book value was reduced by a real estate impairment loss
pursuant to Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." The real estate impairment
loss, which was recorded against the book cost of the land and
depreciable property, was not recognized for tax purposes.
During the last five years, or since the date of purchase
if purchased after December 31, 1993, all properties were 100
percent occupied by the lessees noted, with the exception of the
Taco Cabana restaurant in Brownsville, Texas which was 100%
occupied until January, 1997 and was vacant until November, 1998.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS.
As of December 31, 1998, there were 1,562 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 1998, forty-two Limited Partners redeemed a total
of 576.8 Partnership Units for $461,904 in accordance with the
Partnership Agreement. In prior years, a total of seventy-eight
Limited Partners redeemed 1,295.52 Partnership Units for
$1,028,771 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 $14,039 and $13,307 were made to the
General Partners and $927,959 and $1,124,461 were made to the
Limited Partners in 1998 and 1997, 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 $103,771 of proceeds from
property sales in 1997. 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, 1998 and 1997, the
Partnership recognized rental income of $1,542,916 and
$1,418,118, respectively. During the same periods, the
Partnership earned investment income of $204,997 and $191,115,
respectively. In 1998, rental income increased as a result of
the additional rent received from six property acquisitions in
1997 and 1998 and rent increases on eight properties. The
increase in rental income was partially offset by the property
sales discussed below. In 1998, the Partnership earned
additional investment income 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
1998 and 1997. The total amount of rent not collected in 1998
and 1997 was $101,715 and $339,093, 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 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 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 $350,635,
which resulted in a net loss on the sale of $22,345.
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 $77,025 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 re-lease.
The Partnership was scheduled to receive, but did not collect,
$99,388 and $115,285 in rent in 1998 and 1997, respectively.
This amount was not accrued for financial reporting purposes.
While the property was vacant, the Partnership was 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On November 18, 1998, the Partnership re-leased the
Brownsville property to Sergio Gonzalez under a Lease Agreement
with a primary term of two years and annual rental payments of
$37,200. The property is now operated as a Taco Fiesta
restaurant.
During the years ended December 31, 1998 and 1997, the
Partnership paid Partnership administration expenses to
affiliated parties of $240,525 and $249,520, 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 $59,440 and $98,128, 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 December 31, 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
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.
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
Liquidity and Capital Resources
During 1998, the Partnership's cash balances decreased
$3,902,196 mainly as a result of cash used to purchase additional
properties. Net cash provided by operating activities increased
from $1,155,326 in 1997 to $1,421,055 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 1998 and 1997, the Partnership
generated cash flow from the sale of real estate of $350,635 and
$4,129,390, respectively. During the same periods, the
Partnership expended $4,334,115 and $1,908,049, respectively, to
invest in real properties (inclusive of acquisition expenses) as
the Partnership reinvested the cash generated from the property
sales.
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 year ended December 31, 1997,
the net gain was $320,171.
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 year ended
December 31, 1997, the net gain was $355,897.
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 year ended
December 31, 1997, the net gain was $179,517.
During 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.
Subsequent to December 31, 1998, the Partnership sold its
24% interest in the HomeTown Buffet restaurant in three separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of approximately $437,000 which
resulted in a net gain of approximately $160,000.
During 1997, the Partnership distributed $104,820 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 $4.77 per Limited Partnership Unit. The remaining
net sale proceeds were reinvested in additional properties.
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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 advanced funds to Champps
for the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective June 20, 1998, the
interest rate was increased to 10.50%. On September 3, 1998,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $122,605. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $1,192,496. 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.
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, Inc. (TWI) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $18,438.
Effective August 10, 1998, the annual rent was increased to
$22,234. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement under
which the Partnership advanced funds to TWI for the construction
of a Tumbleweed restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of 8.5%.
Effective August 10, 1998, the interest rate was increased to
10.25%. On November 20, 1998, after the development was
completed, the Lease Agreement was amended to require annual
rental payments of $57,314. The Partnership's share of the total
acquisition costs, including the cost of the land, was $573,831.
The remaining interests in the property are owned by the
Individual General Partner and AEI Net Lease Income & Growth Fund
XIX Limited 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 TWI under a Lease Agreement with a primary term of
15 years and annual rental payments of $42,826. Effective August
28, 1998, the annual rent was increased to $51,643.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership advanced funds to TWI for the construction of a
Tumbleweed restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 8.5%. Effective
August 28, 1998, the interest rate was increased to 10.25%. On
December 28, 1998, after the development was completed, the
Partnership assigned, for diversification purposes, 60% of its
interest in the property to an affiliated Partnership and the
Lease Agreement was amended to require annual rental payments of
$55,401. The Partnership's share of the total acquisition costs,
including the cost of the land, was $554,269. The remaining
interest in the property is owned by AEI Net Lease Income &
Growth Fund XIX Limited Partnership.
In April, 1998, the Partnership entered into an Agreement
to purchase an Old Country Buffet restaurant to be constructed in
Northlake, Illinois. On May 18, 1998, the Partnership purchased
the land for $330,000. The Partnership charged interest on the
land at a rate of 10% until September 27, 1998. On September 28,
1998, the tenant began paying annual rent of $130,000. On
September 30, 1998, the Partnership advanced $370,000 for the
construction of the property. On December 29, 1998, after the
construction was completed, the Partnership paid $639,000 of
additional construction costs. The total acquisition cost was
$1,350,804. The property is leased to OCB Realty Co. under a
Lease Agreement with a primary term of 20 years.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On August 28, 1998, the Partnership purchased a 38%
interest in a parcel of land in Centerville, Ohio for $703,376.
The land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $49,236. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through December 31, 1998, the Partnership had advanced
$439,301 for the construction of the property and was charging
interest on the advances at a rate of 7%. Effective December 25,
1998, the interest rate was increased to 10.5%. On January 27,
1999, after the development was completed, the Lease Agreement
was amended to require annual rental payments of $154,075. The
Partnership's share of the total acquisition costs, including the
cost of the land, was approximately $1,467,000. The remaining
interests in the property are owned by AEI Real Estate Fund XVII
Limited Partnership, AEI Income & Growth Fund XXI Limited
Partnership and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership.
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.
During 1998, forty-two Limited Partners redeemed a total
of 576.8 Partnership Units for $461,904 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
seventy-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 should be
adequate to fund continuing distributions and meet other
Partnership obligations on both a short-term and long-term basis.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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.
ITEM 7. FINANCIAL STATEMENTS.
See accompanying index to financial statements.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors
Balance Sheet as of December 31, 1998 and 1997
Statements for the Years Ended December 31, 1998 and 1997:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
REPORT OF INDEPENDENT AUDITORS
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, 1998 and 1997 and the related
statements of income, cash flows and changes in partners' capital
for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of AEI Real Estate Fund XVIII Limited Partnership as of December
31, 1998 and 1997 and the results of its operations and its cash
flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
Minneapolis, Minnesota Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 27, 1999 Certified Public Accountants
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 311,087 $ 4,213,283
Receivables 52,928 20,547
----------- -----------
Total Current Assets 364,015 4,233,830
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 5,491,552 3,970,611
Buildings and Equipment 10,652,675 8,160,729
Construction in Progress 439,301 43,208
Property Acquisition Costs 22,316 97,181
Accumulated Depreciation (2,159,173) (1,853,954)
----------- -----------
14,446,671 10,417,775
Real Estate Held for Sale 0 372,980
----------- -----------
Net Investments in Real Estate 14,446,671 10,790,755
----------- -----------
Total Assets $14,810,686 $15,024,585
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 16,768 $ 23,780
Distributions Payable 195,285 131,154
Security Deposit 12,500 0
Unearned Rent 5,000 5,000
----------- -----------
Total Current Liabilities 229,553 159,934
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (49,653) (46,818)
Limited Partners, $1,000 Unit Value;
30,000 Units authorized; 22,783 Issued;
20,910 and 21,487 outstanding in 1998
and 1997, respectively 14,630,786 14,911,469
----------- -----------
Total Partners' Capital 14,581,133 14,864,651
----------- -----------
Total Liabilities and Partners' Capital $14,810,686 $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 YEARS ENDED DECEMBER 3l
1998 1997
INCOME:
Rent $ 1,542,916 $ 1,418,118
Investment Income 204,997 191,115
----------- -----------
Total Income 1,747,913 1,609,233
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 240,525 249,520
Partnership Administration and Property
Management - Unrelated Parties 59,440 98,128
Depreciation 305,219 321,950
Real Estate Impairment 0 460,100
----------- -----------
Total Expenses 605,184 1,129,698
----------- -----------
OPERATING INCOME 1,142,729 479,535
GAIN (LOSS) ON SALE OF REAL ESTATE (22,345) 1,135,222
----------- -----------
NET INCOME $ 1,120,384 $ 1,614,757
=========== ===========
NET INCOME ALLOCATED:
General Partners $ 11,204 $ 16,147
Limited Partners 1,109,180 1,598,610
----------- -----------
$ 1,120,384 $ 1,614,757
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(21,211 and 21,695 weighted average Units outstanding
in 1998 and 1997, respectively) $ 52.29 $ 73.69
=========== ===========
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
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,120,384 $ 1,614,757
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 305,219 321,950
Real Estate Impairment 0 460,100
(Gain) Loss on Sale of Real Estate 22,345 (1,135,222)
Increase in Receivables (32,381) (7,677)
Decrease in Payable to
AEI Fund Management, Inc. (7,012) (97,917)
Increase (Decrease) in Security Deposit 12,500 (665)
----------- -----------
Total Adjustments 300,671 (459,431)
----------- -----------
Net Cash Provided By
Operating Activities 1,421,055 1,155,326
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (4,334,115) (1,908,049)
Proceeds from Sale of Real Estate 350,635 4,129,390
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (3,983,480) 2,221,341
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable 64,131 (192,630)
Distributions to Partners (937,332) (1,135,819)
Redemption Payments (466,570) (194,861)
----------- -----------
Net Cash Used For
Financing Activities (1,339,771) (1,523,310)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (3,902,196) 1,853,357
CASH AND CASH EQUIVALENTS, beginning of period 4,213,283 2,359,926
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 311,087 $ 4,213,283
=========== ===========
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, 1996 $ (49,658) $14,630,232 $14,580,574 21,764.38
Distributions (11,358) (1,124,461) (1,135,819)
Redemption Payments (1,949) (192,912) (194,861) (277.10)
Net Income 16,147 1,598,610 1,614,757
--------- ----------- ----------- -----------
BALANCE, December 31, 1997 (46,818) 14,911,469 14,864,651 21,487.28
Distributions (9,373) (927,959) (937,332)
Redemption Payments (4,666) (461,904) (466,570) (576.80)
Net Income 11,204 1,109,180 1,120,384
--------- ----------- ----------- -----------
BALANCE, December 31, 1998 $ (49,653) $14,630,786 $14,581,133 20,910.48
========= =========== =========== ===========
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
DECEMBER 31, 1998 AND 1997
(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, 1998 AND 1997
(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, 1998 AND 1997
(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 may 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 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 Partnership compares 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 Partnership recognizes an impairment loss
by the amount by which the carrying amount of the
property exceeds the fair value of the property.
The Partnership has capitalized as Investments in Real
Estate certain costs incurred in the review and
acquisition of the properties. The costs were allocated
to the land, buildings and equipment.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(2) Summary of Significant Accounting Policies - (Continued)
The buildings and equipment of the Partnership are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 30
years and 10 years, respectively.
The Partnership accounts for properties owned as tenants-
in-common with affiliated Partnerships and/or 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 financial
statements reflect only this Partnership's percentage
share of the properties' land, building and equipment,
liabilities, revenues and expenses.
(3) Related Party Transactions -
The Partnership owns a 27% interest in an Applebee's
restaurant in Slidell, Louisiana. The remaining interest in
this property is owned by AEI Real Estate Fund XVI Limited
Partnership, an affiliate of the Partnership. As of
December 31, 1998, the Partnership owns a 24% interest in
the HomeTown Buffet restaurant. The remaining interests in
this property are owned by AEI Net Lease Income & Growth
Fund XIX Limited Partnership, an affiliate of the
Partnership, and unrelated third parties. AEI Institutional
Net Lease Fund '93 Limited Partnership owned a 15.8%
interest in this property until December 4, 1998 when its
interest was sold to an unrelated third party. The
Partnership owns a 6.1688% interest in the Champps Americana
restaurant in Columbus, Ohio. The remaining interests in
this property are owned by AEI Income & Growth Fund XXI
Limited Partnership, an affiliate of the Partnership, and
unrelated third parties. The Partnership owns a 23.95%
interest in the Champps Americana restaurant in Troy,
Michigan. The remaining interests in this 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. The Partnership owns a 45.0% interest in
the Tumbleweed restaurant in Chillicothe, Ohio. The
remaining interests in this property are owned by the
Individual General Partner and AEI Net Lease Income & Growth
Fund XIX Limited Partnership. The Partnership owns a 40.0%
interest in the Tumbleweed restaurant in Columbus, Ohio.
The remaining interest in this property is owned by AEI Net
Lease Income & Growth Fund XIX Limited Partnership. The
Partnership owns a 38.0% interest in the Champps Americana
restaurant in Centerville, Ohio. The remaining interests in
the property are owned by AEI Real Estate Fund XVII Limited
Partnership, AEI Income & Growth Fund XXI Limited
Partnership and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership. The Partnership
owns a 7.5158% interest in the Tractor Supply Company store.
The remaining interests in this property are owned by
unrelated third parties. The Individual General Partner
owned a 15% interest in this property until March 10, 1997,
when the last portion of his interest was sold to an
unrelated third party. The Partnership owned a 4.1022%
interest in the Sizzler restaurant in Cincinnati, Ohio. The
remaining interests in this property were owned by AEI Real
Estate Fund XVI Limited Partnership and AEI Real Estate Fund
XVII Limited Partnership, affiliates of the Partnership.
The Partnership owned a 93.2478% interest in the Sizzler
restaurant in Springboro, Ohio. The remaining interest in
the property was owned by AEI Real Estate Fund 86-A Limited
Partnership, an affiliate of the Partnership.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(3) Related Party Transactions - (Continued)
AEI and AFM received the following compensation and
reimbursements for costs and expenses from the Partnership:
Total Incurred by the Partnership
for the Years Ended December 31
1998 1997
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. $ 240,525 $ 249,520
======== ========
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. $ 59,440 $ 98,128
======== ========
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 $141,994 and $14,267
for 1998 and 1997, respectively. $ (43,809) $ 122,610
======== ========
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.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate -
The Partnership leases its properties to various tenants
through 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, Texas, the Rally's restaurants,
the Tumbleweed restaurants, and the Children's World daycare
centers, which have Lease terms of 15 years and the Tractor
Supply Company store 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
Americana, Applebee's in Slidell, Louisiana, Fuddrucker's
and Rally's restaurants which have renewal options that may
extend the Lease term an additional 15 years and the Old
Country Buffet restaurant which has a renewal option that
may extend the Lease term an additional 20 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.
The Partnership's properties are all commercial, single-
tenant buildings. The Children's World in Phoenix, Arizona
was constructed in 1988 and acquired in 1989. One of the
Taco Cabana restaurants in San Antonio, Texas was
constructed in 1984, renovated in 1991 and acquired by the
Partnership after the renovation. The Rally's restaurants
and the Children's World in Columbus, Ohio were constructed
and acquired in 1992. The Applebee's in Slidell, Louisiana
was constructed in 1991 and acquired in 1993. The HomeTown
Buffet restaurant was constructed and acquired in 1993. The
Tractor Supply Company store and Champps Americana
restaurant in Columbus, Ohio were constructed and acquired
in 1996. The Fuddrucker's restaurant was constructed and
acquired in 1997. The Champps Americana in Troy, Michigan,
the Old Country Buffet, and the Tumbleweed restaurants were
constructed and acquired in 1998. The land for the Champps
Americana restaurant in Centerville, Ohio was acquired in
1998 and construction of the restaurant was completed in
1999. The remaining properties were constructed and
acquired in either 1990 or 1991. There have been no costs
capitalized as improvements subsequent to the acquisitions.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
For those properties in the table below which do not have
land costs, the lessee has entered into land leases with
unrelated third parties. The cost of the properties and
related accumulated depreciation at December 31, 1998 are as
follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Children's World, Phoenix, AZ $ 259,467 $ 624,019 $ 883,486 $ 223,418
Pasta Fair Restaurant,
Belleview, FL 251,593 681,269 932,862 197,757
Children's World,
Blue Springs, MO 162,290 628,981 791,271 200,227
Children's World, Lenexa, KS 185,788 797,739 983,527 244,843
Taco Cabana, San Antonio, TX 871,844 534,582 1,406,426 158,830
Cheddar's, Clive, IA 379,249 1,012,999 1,392,248 312,215
Children's World,
Westerville, OH 157,848 832,413 990,261 230,731
Taco Cabana, San Antonio, TX 61,004 46,929 107,933 11,355
Taco Fiesta, Brownsville, TX 294,450 265,888 560,338 101,044
Applebee's, Destin, FL 30,239 34,976 65,215 10,441
Children's World,
Columbus, OH 157,569 861,633 1,019,202 201,376
Rally's, San Antonio, TX 0 195,741 195,741 66,153
Rally's, San Antonio, TX 0 196,397 196,397 66,800
Applebee's, Slidell, LA 104,613 175,405 280,018 33,132
HomeTown Buffet,
Tucson, AZ 163,688 140,045 303,733 25,869
Tractor Supply Company,
Bristol, VA 31,092 65,673 96,765 6,418
Champps Americana,
Columbus, OH 53,296 104,961 158,257 8,674
Fuddrucker's, Thornton, CO 444,692 961,079 1,405,771 47,149
Champps Americana, Troy, MI 385,295 807,201 1,192,496 9,341
Tumbleweed, Chillicothe, OH 234,796 339,035 573,831 1,511
Tumbleweed, Columbus, OH 216,467 337,802 554,269 489
Old Country Buffet, Northlake, IL 342,896 1,007,908 1,350,804 1,400
Champps Americana,
Centerville, OH 703,376 0 703,376 0
----------- ----------- ----------- ----------
$ 5,491,552 $10,652,675 $16,144,227 $2,159,173
=========== =========== =========== ==========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
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 1998
and 1997. The total amount of rent not collected in 1998
and 1997 was $101,715 and $339,093, 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
$350,635, which resulted in a net loss on the sale of
$22,345.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(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 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
$77,025 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 re-lease. The Partnership was scheduled to
receive, but did not collect, $99,388 and $115,285 in rent
in 1998 and 1997, respectively. This amount was not accrued
for financial reporting purposes. While the property was
vacant, the Partnership was 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.
On November 18, 1998, the Partnership re-leased the
Brownsville property to Sergio Gonzalez under a Lease
Agreement with a primary term of two years and annual rental
payments of $37,200. The property is now operated as a Taco
Fiesta restaurant.
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
year ended December 31, 1997, the net gain was $320,171.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
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 year
ended December 31, 1997, the net gain was $355,897.
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 year ended December 31, 1997, the net
gain was $179,517.
During 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.
Subsequent to December 31, 1998, the Partnership sold its
24% interest in the HomeTown Buffet restaurant in three
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of
approximately $437,000 which resulted in a net gain of
approximately $160,000.
During 1997, the Partnership distributed $104,820 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 $4.77 per Limited Partnership Unit.
The remaining net sale proceeds were reinvested in
additional properties.
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 advanced funds to Champps for the construction
of a Champps Americana restaurant on the site. Initially,
the Partnership charged interest on the advances at a rate
of 7.0%. Effective June 20, 1998, the interest rate was
increased to 10.50%. On September 3, 1998, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $122,605. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $1,192,496.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) 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, Inc. (TWI) under a Lease Agreement
with a primary term of 15 years and annual rental payments
of $18,438. Effective August 10, 1998, the annual rent was
increased to $22,234. Simultaneously with the purchase of
the land, the Partnership entered into a Development
Financing Agreement under which the Partnership advanced
funds to TWI for the construction of a Tumbleweed restaurant
on the site. Initially, the Partnership charged interest on
the advances at a rate of 8.5%. Effective August 10, 1998,
the interest rate was increased to 10.25%. On November 20,
1998, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$57,314. The Partnership's share of the total acquisition
costs, including the cost of the land, was $573,831.
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 TWI under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$42,826. Effective August 28, 1998, the annual rent was
increased to $51,643. Simultaneously with the purchase of
the land, the Partnership entered into a Development
Financing Agreement under which the Partnership advanced
funds to TWI for the construction of a Tumbleweed restaurant
on the site. Initially, the Partnership charged interest on
the advances at a rate of 8.5%. Effective August 28, 1998,
the interest rate was increased to 10.25%. On December 28,
1998, after the development was completed, the Partnership
assigned, for diversification purposes, 60% of its interest
in the property to an affiliated Partnership and the Lease
Agreement was amended to require annual rental payments of
$55,401. The Partnership's share of the total acquisition
costs, including the cost of the land, was $554,269.
In April, 1998, the Partnership entered into an Agreement to
purchase an Old Country Buffet restaurant to be constructed
in Northlake, Illinois. On May 18, 1998, the Partnership
purchased the land for $330,000. The Partnership charged
interest on the land at a rate of 10% until September 27,
1998. On September 28, 1998, the tenant began paying annual
rent of $130,000. On September 30, 1998, the Partnership
advanced $370,000 for the construction of the property. On
December 29, 1998, after the construction was completed, the
Partnership paid $639,000 of additional construction costs.
The total acquisition cost was $1,350,804. The property is
leased to OCB Realty Co. under a Lease Agreement with a
primary term of 20 years.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
On August 28, 1998, the Partnership purchased a 38% interest
in a parcel of land in Centerville, Ohio for $703,376. The
land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual
rental payments of $49,236. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
will advance funds to ADC for the construction of a Champps
Americana restaurant on the site. Through December 31,
1998, the Partnership had advanced $439,301 for the
construction of the property and was charging interest on
the advances at a rate of 7%. Effective December 25, 1998,
the interest rate was increased to 10.5%. On January 27,
1999, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$154,075. The Partnership's share of the total acquisition
costs, including the cost of the land, was approximately
$1,467,000.
During 1998 and 1997, the Partnership incurred net costs of
$78,801 related to the review of potential property
acquisitions. Of these costs, $56,485 have been capitalized
and allocated to land, building and equipment. The
remaining costs of $22,316 have been capitalized and will be
allocated to properties acquired subsequent to December 31,
1998.
The minimum future rentals on the Leases for years
subsequent to December 31, 1998 are as follows:
1999 $ 1,855,708
2000 1,865,190
2001 1,842,243
2002 1,855,839
2003 1,869,881
Thereafter 14,259,443
-----------
$23,548,304
===========
In 1998 and 1997, the Partnership recognized contingent
rents of $19,110 and $17,135, respectively.
(5) Security Deposit -
In November, 1998, the Partnership received a deposit from
the tenant of the Taco Fiesta restaurant as security for
future rent payments. The funds are invested in a short-
term money market account and will be refunded, without
interest, to the tenant, upon termination of the Lease,
provided there is no default in the Lease Agreement.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(6) 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:
1998 1997
Tenants Industry
ARAMARK Educational
Resources, Inc. Child Care $ 574,781 $ 556,803
Texas Taco Cabana L.P. Restaurant 219,658 267,322
Heartland Restaurant Corp. Restaurant 210,212 202,127
---------- ----------
Aggregate rent revenue of major tenants $1,004,651 $1,026,252
========== ==========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 65% 72%
========== ==========
(7) Partners' Capital -
Cash distributions of $14,039 and $13,307 were made to the
General Partners and $927,959 and $1,124,461 were made to
the Limited Partners for the years ended December 31, 1998
and 1997, respectively. The Limited Partners' distributions
represent $43.75 and $51.83 per Limited Partnership Unit
outstanding using 21,211 and 21,695 weighted average Units
in 1998 and 1997, respectively. The distributions represent
$30.40 and $51.83 per Unit of Net Income, and $13.35 and $-0-
per Unit of return of contributed capital in 1998 and 1997,
respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $103,771 of proceeds from
property sales in 1997. The distributions reduced the
Limited Partners' Adjusted Capital Contributions.
Distributions of Net Cash Flow to the General Partners
during 1998 and 1997 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, 1998 AND 1997
(7) Partners' Capital - (Continued)
During 1998, forty-two Limited Partners redeemed a total of
576.8 Partnership Units for $461,904 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1997, seventeen
Limited Partners redeemed a total of 277.1 Partnership Units
for $192,912. 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
$1,028.98 per original $1,000 invested.
(8) Income Taxes -
The following is a reconciliation of net income for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
1998 1997
Net Income for Financial
Reporting Purposes $1,120,384 $1,614,757
Depreciation for Tax Purposes
(Over) Under Depreciation for Financial
Reporting Purposes 15,567 (3,136)
Amortization of Start-Up and
Organization Costs (1,239) (9,742)
Income Accrued for Tax Purposes
Under Income for Financial
Reporting Purposes 0 (17,207)
Property Expenses for Tax Purposes
(Over) Under Expenses for Financial
Reporting Purposes 3,164 (6,668)
Real Estate Impairment Loss
Not Recognized for Tax Purposes 0 460,100
Gain on Sale of Real Estate for
Tax Purposes Under Gain for
Financial Reporting Purposes 0 (978,326)
Loss on Sale of Real Estate for
Tax Purposes Over Loss for
Financial Reporting Purposes (660,526) 0
---------- ----------
Taxable Income to Partners $ 477,350 $1,059,778
========== ==========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(8) 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:
1998 1997
Partners' Capital for
Financial Reporting Purposes $14,581,133 $14,864,651
Adjusted Tax Basis of Investments
in Real Estate Over (Under) Net
Investments in Real Estate
for Financial Reporting Purposes 545,042 1,186,837
Capitalized Start-Up Costs
Under Section 195 397,387 397,387
Amortization of Start-Up and
Organization Costs (403,387) (402,148)
Income Accrued for Tax Purposes Over
Income for Financial
Reporting Purposes 5,000 5,000
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 $18,467,617 $19,394,169
=========== ===========
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(9) 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:
1998 1997
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash $ 534 $ 534 $ 234 $ 234
Money Market Funds 310,553 310,553 3,217,857 3,217,857
Commercial Paper
(held to maturity) 0 0 995,192 995,192
--------- --------- --------- ---------
Total Cash and
Cash Equivalents $ 311,087 $ 311,087 $4,213,283 $4,213,283
========= ========= ========= =========
The amortized cost basis of the commercial paper 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 54, 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 December, 1999. 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
Securities, Inc. (formerly 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 seventeen other limited
partnerships.
Mark E. Larson, age 46, is Executive Vice President,
Treasurer and Chief Financial Officer and has been elected to
continue in these position until December, 1999. 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 December,
1999. 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.
The following table sets forth information pertaining to
the ownership of the Units by each person known by the
Partnership to beneficially own 5% or more of the Units, by each
General Partner, and by each officer or director of the Managing
General Partner as of February 28, 1999:
Name and Address Number of Percent
of Beneficial Owner Units Held of Class
AEI Fund Management XVIII, Inc. 0 0%
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
Robert P. Johnson 0 0%
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
Mark E. Larson 0 0%
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
The General Partners know of no holders of more than 5% of the
outstanding Units.
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.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (Continued)
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, 1998.
Person or Entity Amount Incurred From Inception
Receiving Form and Method (September 20, 1988) to
Compensation of Compensation December 31, 1998
AEI Securities, Inc. Selling Commissions equal to 7% $2,278,305
(formerly AEI of proceeds plus a 3% nonaccountable
Incorporated) expense allowance, most of which was
reallowed to Participating Dealers.
General Partners and Reimbursement at Cost for other $1,064,137
Affiliates Organization and Offering Costs.
General Partners and Reimbursement at Cost for all $ 551,143
Affiliates Acquisition Expenses
General Partners 1% of Net Cash Flow in any fiscal $ 142,256
year until the Limited Partners have
received annual, non-cumulative
distributions of Net Cash Flow equal
to 10% of their Adjusted Capital
Contributions and 10% of any remaining
Net Cash Flow in such fiscal year.
General Partners and Reimbursement at Cost for all $2,484,436
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.
General Partners 15% of distributions of Net Proceeds $ 12,793
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.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (Continued)
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, 1998, 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]).
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).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
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
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).
10.9 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).
10.10 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).
10.11 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).
10.12 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).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.13 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).
10.14 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).
10.15 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).
10.16 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).
10.17 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).
10.18 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).
10.19 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).
10.20 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).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.21 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).
10.22 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).
10.23 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
(incorporated by reference to Exhibit 10.34
of Form 10-KSB filed with the Commission on
March 17, 1997).
10.24 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 (incorporated
by reference to Exhibit 10.38 of Form 10-KSB
filed with the Commission on March 17, 1997).
10.25 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
(incorporated by reference to Exhibit 10.39
of Form 10-KSB filed with the Commission on
March 17, 1997).
10.26 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
(incorporated by reference to Exhibit 10.40
of Form 10-KSB filed with the Commission on
March 17, 1997).
10.27 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 (incorporated by
reference to Exhibit 10.42 of Form 10-KSB
filed with the Commission on March 17, 1997).
10.28 Property Co-Tenancy Ownership
Agreement dated March 10, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at Old Airport Road and I-81, Bristol,
Virginia (incorporated by reference to
Exhibit 10.2 of Form 10-QSB filed with the
Commission on May 13, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.29 Property Co-Tenancy Ownership
Agreement dated March 10, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at 5701 Emerald Coast Parkway, Destin,
Florida (incorporated by reference to Exhibit
10.4 of Form 10-QSB filed with the Commission
on May 13, 1997).
10.30 Property Co-Tenancy Ownership
Agreement dated March 10, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at 161 E. Campus View Boulevard, Columbus,
Ohio (incorporated by reference to Exhibit
10.6 of Form 10-QSB filed with the Commission
on May 13, 1997).
10.31 Property Co-Tenancy Ownership
Agreement dated March 21, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at Old Airport Road and I-81, Bristol,
Virginia (incorporated by reference to
Exhibit 10.8 of Form 10-QSB filed with the
Commission on May 13, 1997).
10.32 Property Co-Tenancy Ownership
Agreement dated March 21, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at 5701 Emerald Coast Parkway, Destin,
Florida (incorporated by reference to Exhibit
10.11 of Form 10-QSB filed with the
Commission on May 13, 1997).
10.33 Property Co-Tenancy Ownership
Agreement dated March 21, 1997 between the
Partnership and the Thomas W. Adamson Family
Limited Partnership relating to the property
at 161 E. Campus View Boulevard, Columbus,
Ohio (incorporated by reference to Exhibit
10.14 of Form 10-QSB filed with the
Commission on May 13, 1997).
10.34 Purchase Agreement dated May 31,
1997 between the Partnership and Shun Cho
Young and Chung Hsi Ho relating to the
property at 6435 Dixie Highway, Fairfield,
Ohio (incorporated by reference to Exhibit
10.1 of Form 10-QSB filed with the Commission
on August 5, 1997).
10.35 Sale and Leaseback Financing
Commitment dated June 30, 1997 between AEI
Fund Management, Inc. and Fuddrucker's, Inc.
relating to the property at 12020
Pennsylvania Street, Thornton, Colorado
(incorporated by reference to Exhibit 10.2 of
Form 10-QSB filed with the Commission on
August 5, 1997).
10.36 Letter of Assignment dated July 15,
1997 between the Partnership and AEI Fund
Management, Inc. relating to the property at
12020 Pennsylvania Street, Thornton, Colorado
(incorporated by reference to Exhibit 10.3 of
Form 10-QSB filed with the Commission on
August 5, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.37 Purchase Agreement dated July 25,
1997 between the Partnership and Calderwood
Investments Limited Partnership relating to
the property at 161 E. Campus View Boulevard,
Columbus, Ohio (incorporated by reference to
Exhibit 10.4 of Form 10-QSB filed with the
Commission on August 5, 1997).
10.38 Property Co-Tenancy Ownership
Agreement dated July 28, 1997 between the
Partnership and Calderwood Investments
Limited Partnership relating to the property
at 161 E. Campus View Boulevard, Columbus,
Ohio (incorporated by reference to Exhibit
10.5 of Form 10-QSB filed with the Commission
on August 5, 1997).
10.39 Net Lease Agreement dated July 30,
1977 between the Partnership and
Fuddrucker's, Inc. relating to the property
at 12020 Pennsylvania Street, Thornton,
Colorado (incorporated by reference to
Exhibit 10.6 of Form 10-QSB filed with the
Commission on August 5, 1997).
10.40 Purchase Agreement dated July 16,
1997 between the Partnership and Stanley E.
LaCorte relating to the property at 5701
Emerald Coast Parkway, Destin, Florida
(incorporated by reference to Exhibit 10.1 of
Form 10-QSB filed with the Commission on
November 4, 1997).
10.41 Purchase Agreement dated August 19,
1997 between the Partnership and Truong
Hoang, Trustee and Thanh Do, Trustee of the
Hoang-Do Family Living Trust relating to the
property at 5701 Emerald Coast Parkway,
Destin, Florida (incorporated by reference to
Exhibit 10.2 of Form 10-QSB filed with the
Commission on November 4, 1997).
10.42 Property Co-Tenancy Ownership
Agreement dated September 9, 1997 between the
Partnership and Truong Hoang, Trustee and
Thanh Do, Trustee of the Hoang-Do Family
Living Trust relating to the property at 5701
Emerald Coast Parkway, Destin, Florida
(incorporated by reference to Exhibit 10.3 of
Form 10-QSB filed with the Commission on
November 4, 1997).
10.43 Purchase Agreement dated September
9, 1997 between the Partnership and Nick
DeVito, Inc. relating to the property at 6867
Highway 90 West, San Antonio, Texas
(incorporated by reference to Exhibit 10.4 of
Form 10-QSB filed with the Commission on
November 4, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.44 Purchase Agreement dated
September 12, 1997 between the Partnership
and Ernest E. Ainslie and Marion B. Ainslie,
Trustees of the Ainslie Living Trust relating
to the property at Old Airport Road and I-81,
Bristol, Virginia (incorporated by reference
to Exhibit 10.64 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.45 Property Co-Tenancy Ownership
Agreement dated September 22, 1997 between
the Partnership and Stanley E. LaCorte
relating to the property at 5701 Emerald
Coast Parkway, Destin, Florida (incorporated
by reference to Exhibit 10.5 of Form 10-QSB
filed with the Commission on November 4,
1997).
10.46 Property Co-Tenancy Ownership
Agreement dated September 25, 1997 between
the Partnership and Nick DeVito, Inc.
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 4,
1997).
10.47 Purchase Agreement dated September
30, 1997 between the Partnership and Reginald
O. Hill, Trustee of the Reginald O. Hill
Trust dated 5/25/95 and Donna Jean Hill,
Trustee of the Donna Jean Hill Trust dated
5/25/95 relating to the property at 6867
Highway 90 West, San Antonio, Texas
(incorporated by reference to Exhibit 10.7 of
Form 10-QSB filed with the Commission on
November 4, 1997).
10.48 Purchase Agreement dated October 5,
1997 between the Partnership and Anthony
Drago, Trustee, U/A DTD 8/19/80, FBO Anthony
and Sydelle Drago Family Trust 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 4, 1997).
10.49 Property Co-Tenancy Ownership
Agreement dated October 9, 1997 between the
Partnership and Reginald O. Hill, Trustee of
the Reginald O. Hill Trust dated 5/25/95 and
Donna Jean Hill, Trustee of the Donna Jean
Hill Trust dated 5/25/95 relating to the
property at 6867 Highway 90 West, San
Antonio, Texas (incorporated by reference to
Exhibit 10.9 of Form 10-QSB filed with the
Commission on November 4, 1997).
10.50 Property Co-Tenancy Ownership
Agreement dated October 24, 1997 between the
Partnership and Anthony Drago, Trustee, U/A
DTD 8/19/80, FBO Anthony and Sydelle Drago
Family Trust relating to the property at 6867
Highway 90 West, San Antonio, Texas
(incorporated by reference to Exhibit 10.10
of Form 10-QSB filed with the Commission on
November 4, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.51 Property Co-Tenancy
Ownership Agreement dated November 5, 1997
between the Partnership and Ernest E. Ainslie
and Marion B. Ainslie, Trustees of the
Ainslie Living Trust relating to the property
at Old Airport Road and I-81, Bristol,
Virginia (incorporated by reference to
Exhibit 10.71 of Form 10-KSB filed with the
Commission on March 23, 1998).
10.52 Purchase Agreement dated
November 6, 1997 between the Partnership and
the Helen W. Rehwaldt, Trustee, Deerwood
Revocable Trust Partnership relating to the
property at Old Airport Road and I-81,
Bristol, Virginia (incorporated by reference
to Exhibit 10.72 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.53 Property Co-Tenancy
Ownership Agreement dated November 21, 1997
between the Partnership and the Helen W.
Rehwaldt, Trustee, Deerwood Revocable Trust
relating to the property at Old Airport Road
and I-81, Bristol, Virginia (incorporated by
reference to Exhibit 10.73 of Form 10-KSB
filed with the Commission on March 23, 1998).
10.54 Development Financing
Agreement dated December 23, 1997 between the
Partnership, AEI Real Estate Fund XV Limited
Partnership, AEI Net Lease Income & Growth
Fund XIX Limited Partnership, AEI Real Estate
Fund XVII Limited Partnership and Champps
Entertainment, Inc. relating to the property
at 301 West Big Beaver Road, Troy, Michigan
(incorporated by reference to Exhibit 10.74
of Form 10-KSB filed with the Commission on
March 23, 1998).
10.55 Net Lease Agreement dated
December 23, 1997 between the Partnership,
AEI Real Estate Fund XV Limited Partnership,
AEI Net Lease Income & Growth Fund XIX
Limited Partnership, AEI Real Estate Fund
XVII Limited Partnership and Champps
Entertainment, Inc. relating to the property
at 301 West Big Beaver Road, Troy, Michigan
(incorporated by reference to Exhibit 10.75
of Form 10-KSB filed with the Commission on
March 23, 1998).
10.56 Assignment of Development
Financing and Leasing Commitment dated
January 26, 1998 between the Partnership and
AEI Fund Management, Inc. relating to the
property at 1150 North Bridge Street,
Chillicothe, Ohio (incorporated by reference
to Exhibit 10.76 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.57 Development Financing Agreement
dated April 13, 1998 between the Partnerhip,
AEI Net Lease Income & Growth Fund XIX
Limited Partnership, Robert P. Johnson, and
Tumbleweed, LLC relating to the property at
1150 North Bridge Street, Chillicothe, Ohio
(incorporated by reference to Exhibit 10.1 of
Form 10-QSB filed with the Commission on May
8, 1998).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.58 Net Lease Agreement dated April 13,
1998 between the Partnerhip, AEI Net Lease
Income & Growth Fund XIX Limited Partnership,
Robert P. Johnson, and Tumbleweed, LLC
relating to the property at 1150 North Bridge
Street, Chillicothe, Ohio (incorporated by
reference to Exhibit 10.2 of Form 10-QSB
filed with the Commission on May 8, 1998).
10.59 Purchase Agreement dated April 17,
1998 between the Partnership and the Alpha
Group, LLC relating to the property at North
Avenue & Wolf Road, Northlake, Illinois
(incorporated by reference to Exhibit 10.3 of
Form 10-QSB filed with the Commission on May
8, 1998).
10.60 Development Financing and Leasing
Commitment dated April 24, 1998 between the
Partnership and Tumbleweed, LLC relating to
the property at 6959 East Broad Street,
Columbus, Ohio (incorporated by reference to
Exhibit 10.4 of Form 10-QSB filed with the
Commission on May 8, 1998).
10.61 Development Financing Agreement
dated May 1, 1998 between the Partnership and
Tumbleweed, LLC relating to the property at
6959 East Broad Street, Columbus, Ohio
(incorporated by reference to Exhibit 10.5 of
Form 10-QSB filed with the Commission on May
8, 1998).
10.62 Net Lease Agreement dated May 1,
1998 between the Partnership and Tumbleweed,
LLC relating to the property at 6959 East
Broad Street, Columbus, Ohio (incorporated by
reference to Exhibit 10.6 of Form 10-QSB
filed with the Commission on May 8, 1998).
10.63 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
(incorporated by reference to Exhibit 10.1 of
Form 10-QSB filed with the Commission on July
31, 1998).
10.64 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
(incorporated by reference to Exhibit 10.2 of
Form 10-QSB filed with the Commission on July
31, 1998).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.65 First Amendment to Net
Lease Agreement dated September 3, 1998
between the Partnership, AEI Net Lease Income
& Growth Fund XIX Limited Partnership, AEI
Real Estate Fund XVII Limited Partnership,
AEI Real Estate Fund XV Limited Partnership
and Champps Entertainment, Inc. relating to
the property at 301 West Big Beaver Road,
Troy, Michigan (incorporated by reference to
Exhibit 10.1 of Form 10-QSB filed with the
Commission on November 9, 1998).
10.66 Assignment of the
Development Financing Agreement and Net Lease
Agreement dated August 27, 1998 between the
Partnership, AEI Real Estate Fund XVII
Limited Partnership, AEI Income & Growth Fund
XXI Limited Partnership, AEI Income & Growth
Fund XXII Limited Partnership and Americana
Dining Corporation relating to the property
at 7880 Washington Village Drive,
Centerville, Ohio (incorporated by reference
to Exhibit 10.2 of Form 10-QSB filed with the
Commission on November 9, 1998).
10.67 Development Financing
Agreement dated June 29, 1998 between AEI
Income & Growth Fund XXII Limited Partnership
and Americana Dining Corporation relating to
the property at 7880 Washington Village
Drive, Centerville, Ohio (incorporated by
reference to Exhibit 10.3 of Form 10-QSB
filed with the Commission on November 9,
1998).
10.68 Net Lease Agreement dated
June 29, 1998 between AEI Income & Growth
Fund XXII Limited Partnership and Americana
Dining Corporation relating to the property
at 7880 Washington Village Drive,
Centerville, Ohio (incorporated by reference
to Exhibit 10.4 of Form 10-QSB filed with the
Commission on November 9, 1998).
10.69 Net Lease Agreement dated
November 18, 1998 between the Partnership and
Sergio Gonzalez relating to the property at
54 South Expressway, Brownsville, Texas.
10.70 First Amendment to Net
Lease Agreement dated November 20, 1998
between the Partnership, AEI Net Lease Income
& Growth Fund XIX Limited Partnership, Robert
P. Johnson and Tumbleweed, LLC relating to
the property at 1150 North Bridge Street,
Chillicothe, Ohio.
10.71 Purchase Agreement for
Fee Simple Undivided Interest and Assignment
of Net Lease Agreement dated December 28,
1998 between the Partnership and AEI Net
Lease Income & Growth Fund XIX Limited
Partnership relating to the property at 6959
East Broad Street, Columbus, Ohio.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A. (Continued)
A. Exhibits -
Description
10.72 First Amendment to Net
Lease Agreement dated December 28, 1998
between the Partnership, AEI Net Lease Income
& Growth Fund XIX Limited Partnership and
Tumbleweed, LLC relating to the property at
6959 East Broad Street, Columbus, Ohio.
10.73 First Amendment to Net
Lease Agreement dated January 27, 1999
between the Partnership, AEI Real Estate Fund
XVII Limited Partnership, AEI Income & Growth
Fund XXI Limited Partnership, AEI Income &
Growth Fund XXII Limited Partnership and
Americana Dining Corp. relating to the
property at 7880 Washington Village Drive,
Centerville, Ohio.
10.74 Purchase Agreement dated
February 23, 1999 between the Partnership and
the Linda L. Landes Family Trust relating to
the property at 330 South Wilmot Road,
Tucson, Arizona.
10.75 Purchase Agreement dated
February 24, 1999 between the Partnership and
the Sherrill L. Hossom Family Trust relating
to the property at 330 South Wilmot Road,
Tucson, Arizona.
10.76 Purchase Agreement dated
February 27, 1999 between the Partnership,
AEI Net Lease Income & Growth Fund XIX
Limited Partnership and Terry Harsha, Sr. and
Janet Sue Harsha relating to the property at
330 South Wilmot Road, Tucson, Arizona.
27 Financial Data Schedule for
year ended December 31, 1998.
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 15, 1999 By: /s/ Robert P. Johnson
Robert P. Johnson, President
and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert P. Johnson President (Principal Executive Officer) March 15, 1999
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E. Larson Executive Vice President, Treasurer March 15, 1999
Mark E. Larson and Chief Financial Officer
(Principal Accounting Officer)
NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of this 18th
day of November, 1998, by and between AEI REAL ESTATE FUND XVIII
LIMITED PARTNERSHIP, a Minnesota limited partnership whose
corporate general partner is AEI Fund Management XVIII, Inc., a
Minnesota corporation, whose address is 1300 Minnesota World
Trade Center, 30 East Seventh Street, St. Paul, Minnesota 55101
("Lessor"), and Sergio Gonzalez, whose business address is 2011
Nolana, McAllen, Tx. 78504 Texas ("Lessee");
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at 54 South Expressway and Boca
Chica Boulevard, Brownsville, Texas and legally described in
Exhibit "A", which is attached hereto and incorporated herein by
reference; and
WHEREAS, Lessee desires to lease the real property and the
building and improvements (together the "Building") on the real
property described in Exhibit "A", (said real property and
Building hereinafter referred to as the "Leased Premises"), from
Lessor upon the terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be two Lease
Years plus the period from the effective date hereof through the
end of the month of November, commencing on the effective date
first listed above, ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a period
ending November 30, 1999. The term "Lease Year" after the first
Lease Year shall be a successive period of twelve (l2) calendar
months.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that it is leasing the Leased
Premises (and any Personalty as set forth in Article 20 herein)
as is, where is, without any warranty whatsoever, and said leased
Personalty, and any and all other improvements to the land,
including the parking lot, approaches, and service areas, will be
maintained in accordance with, and if and when improved by or on
behalf of Lessee, will be constructed in all material respects by
Lessee in accordance with, applicable law, ordinance, or
regulation, and according to plans and specifications submitted
to Lessor for its prior reasonable approval, such approval not to
be unreasonably withheld or delayed, provided Lessee demonstrates
adequate security for the full and complete lien free payment of
construction costs in connection therewith. While otherwise also
set forth in this Lease, it is herein again acknowledged that any
structural improvements or HVAC added by Lessee shall become the
property of Lessor at the termination of this Lease.
(B) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs, to be
incurred in the future, which shall include, but not be limited
to, plans and specifications, general construction, carpentry,
electrical, plumbing, heating, ventilating, air conditioning,
decorating, equipment installation, outside lighting, curbing,
landscaping, blacktopping, electrical sign hookup, conduit and
wiring from building, fencing, and parking curbs, builder's risk
insurance (naming Lessor, Lessee, and contractor as co-insured),
and all construction bonds for improvements made by or at the
direction of Lessee, to the extent incurred or authorized by
Lessee.
Lessee agrees that no improvements shall commence on the
Leased Premises unless and until Lessee has demonstrated to
Lessor's reasonable satisfaction that Lessee has sufficient funds
available to complete and pay in full for any contemplated
improvements, and Lessor has received copies of all contracts for
the construction of such improvements, including any financing
thereof. In the payment for any such improvements, Lessor may
require that Lessee shall follow commercially reasonable escrow
disbursement procedures to protect Lessor's interest in the
Leased Premises from liens and encumbrances, and Lessor shall be
a third party beneficiary to such disbursement procedures.
(C) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the Leased Premises and Personalty
are in the condition described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Lessee shall pay $100 per month for the first full month
of occupancy and $100 per month pro-rata for the partial month of
occupancy during the month of November. Thereafter for the
balance of the first Lease Year and for the entire Second Lease
Year, Lessee shall pay $3,100 per month on or before the first
day of each month.
(B) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of the lesser of
eighteen percent (18%) per annum or the highest rate allowed by
law accruing from the date such Rent or other monetary amounts
were properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of
extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value.
Additionally, replacement cost endorsements, inflation guard
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of six months), and during the course
of construction of any improvements, builder's risk insurance in
commercially reasonable amounts, must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Texas and liquor is sold on the Premises, with
initial limits of at least $2,000,000 per occurrence/$5,000,000
general aggregate, or such additional amounts as Lessor shall
reasonably require from time to time.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf. Lessee will then,
within three (3) days from receiving written notice, pay Lessor
the amount of the premiums due or paid, together with interest
thereon at the lessor of 18% per annum or the highest rate
allowable by law, which amount shall be considered Rent payable
by Lessee in addition to the Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated by
this Article can be under Lessee's blanket insurance coverage and
shall name Lessors, AEI Fund Management XVIII, Inc., a Minnesota
corporation, and Robert P. Johnson, as the general partners of
Lessor, and Lessee as additional named insured, as their
respective interests may appear, and shall provide that the
policies cannot be canceled, terminated, changed, or modified
without thirty (30) days written notice to the parties. In
addition, all of such policies shall contain endorsements by the
respective insurance companies waiving all rights of subrogation,
if any, against Lessor. All insurance companies providing
coverages must be rated "A" or better by Best's Key Rating Guide
(the most current edition), or similar quality under a successor
guide if Best's Key Rating shall cease to be published. Lessee
shall provide Lessor with legible copies of any and all policies
on or before the Occupancy Date. No less than fifteen (15)
business days prior to expiration of such policies, Lessee shall
provide Lessor with legible copies of any and all renewal
Certificates of Insurance, if the terms of the Policies have not
changed, and copies of such policies if the same have changed.
Lessee agrees that it will not settle any property insurance
claims affecting the Leased Premises in excess of $10,000 without
Lessor's prior written consent, such consent not to be
unreasonably withheld or delayed. Lessor shall consent to any
settlement of an insurance claim wherein Lessee shall confirm in
writing with evidence reasonably satisfactory to Lessor that
Lessee has sufficient funds available to complete the rebuilding
of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor harmless
against any and all claims, damages, and lawsuits arising after
the Occupancy Date of this Lease and any orders, decrees or
judgments which may be entered therein, brought for damages or
alleged damages resulting from any injury to person or property
or from loss of life sustained in or about the Leased Premises,
unless such damage or injury results from the intentional
misconduct or the gross negligence of Lessor and Lessee agrees to
save Lessor harmless from, and indemnify Lessor against, any and
all injury, loss, or damage, of whatever nature, to any person or
property caused by, or resulting from any act, omission, or
negligence of Lessee or any employee or agent of Lessee. In
addition, Lessee hereby releases Lessor from any and all
liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or gross
negligence of Lessor.
(F) Lessor hereby waives any and all rights that it may have
to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by its insurers, if the insurance
required by this Lease is maintained.
Lessee hereby waives any and all right that it may have to
recover from Lessor damages for any loss occurring to the Leased
Premises by reason of any act or omission of Lessor; provided,
however, that this waiver is limited to those losses for which
Lessee is, or should be if the insurance required herein is
maintained, compensated by its insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges for
all public utility services rendered or furnished to the Leased
Premises, including heat, water, gas, electricity, sewer, sewage
treatment facilities and the like, all personal property taxes,
real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease and
prior to the expiration of the term hereof.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof or
upon the Rents payable hereunder. Such payments shall be
considered as Rent paid by Lessee in addition to the Rent defined
at Article 4 hereof. If due to a change in the method of
taxation, a franchise tax, Rent tax, or income or profit tax
shall be levied against Lessor in substitution for or in lieu of
any tax which would otherwise constitute a real estate tax, such
tax shall be deemed a real estate tax for the purposes herein and
shall be paid by Lessee.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises in said
respective tax years. For the purposes of this provision, all
personal property taxes, real estate taxes and special
assessments shall be deemed to have been assessed in the year
that the first payment or any installment thereof is due.
(D) Lessee shall have the right to contest or review by legal
proceedings or in such other manner as may be legal (which, if
instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
satisfactory to Lessor. All such proceedings shall be begun as
soon as reasonably possible after the imposition or assessment
of any contested items and shall be prosecuted to final
adjudication with reasonable dispatch. In the event of any
reduction, cancellation, or discharge, Lessee shall pay the
amount that shall be finally levied or assessed against the
Leased Premises or adjudicated to be due and payable, and, if
there shall be any refund payable by the governmental authority
with respect thereto, if Lessee has paid the expenses of Lessor
in such proceeding, Lessee shall be entitled to receive and
retain the same, subject, however, to apportionment as provided
during the first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee if
Lessee fails to commence such proceedings, may, but shall not be
obligated to, contest or review by legal proceedings, or in such
other manner as may be legal, and at Lessor's own expense, any
tax, assessments for public improvements and benefits, or other
governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, and tax or fees charged foreign
limited partnerships or their general partners as a requisite for
doing business in the state where the Leased Premises are
located, arising out of or relating to the income derived from
this Lease. At Lessor's option, Lessee shall deposit with Lessor
on the first day of each and every month during the term hereof,
an amount equal to one-twelfth (1/12) of any estimated sales tax
payable to the State in which the property is situated for Rent
received by Lessor hereunder ("Deposit"). From time to time out
of such Deposit Lessor will pay the sales tax to the State in
which the property is situated as required by law. In the event
the Deposit on hand shall not be sufficient to pay said tax when
the same shall become due from time to time, or the prior
payments shall be less than the current estimated monthly
amounts, then Lessee shall pay to Lessor on demand any amount
necessary to make up the deficiency. The excess of any such
Deposit shall be credited to subsequent payments to be made for
such items. If a default or an event of default shall occur
under the terms of this Lease, Lessor may, at its option, without
being required so to do, apply any Deposit on hand to cure such
default, in such order and manner as Lessor may elect. Lessee
shall also pay to Lessor, as additional Rent, the amount of any
sales, use, or other tax imposed on or measured by any Rent paid
hereunder. Such sales, use, or other tax shall be paid by Lessee
to Lessor at the same time as payment of any installment of Base
Rent is made.
ARTICLE 7.PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer this Lease, or any part of
Lessee's right, title or interest therein;
2. sublet all or any part of the Leased Premises or allow
all or any part of the Leased Premises to be used or occupied by
any other Persons (herein defined as a Party other than Lessee,
be it a corporation, a partnership, an individual or other
entity); or
3. mortgage, pledge or otherwise encumber this Lease, or the
Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any class of capital
stock of any corporate Lessee or sublessee, or the transfer
voting control of the total interest in any other person which is
a Lessee or sublessee, however accomplished, whether in a single
transaction or in a series of related or unrelated transactions,
shall be deemed an assignment of this Lease, or of such sublease,
as the case may be;
2. an agreement by any other Person, directly or indirectly,
to assume Lessee's obligations under this Lease shall be deemed
an assignment;
3. any Person to whom Lessee's interest under this Lease
passes by operation of law, or otherwise, shall be bound by the
provisions of this Article;
4. each modification, amendment or extension or any sublease
to which Lessor has previously consented shall be deemed a new
sublease; and
5. Lessee shall present the signed consent to such
assignment and/or subletting from any guarantors of this Lease,
such consent to be in form and substance satisfactory to Lessor.
Lessee agrees to furnish to Lessor upon demand at any time
such information and assurances as Lessor may reasonably request
that neither Lessee, nor any previously permitted sublessee, has
violated the provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all or
any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessor in its sole discretion (except as
otherwise specifically limited herein) shall not consent to a
proposed sublease or assignment, Lessor shall then have all of
the following rights, any of which Lessor may exercise by written
notice to Lessee given within thirty (30) days after Lessor
receives the aforementioned documents:
1. with respect to a proposed assignment of this Lease,
the right to terminate this Lease on the Effective Date as if it
were the Expiration Date of this Lease;
2. with respect to a proposed subletting of the entire
Leased Premises, the right to terminate this Lease on the
Effective Date as if it were the Expiration Date; or
3. with respect to a proposed subletting of less than
the entire Leased Premises, the right to terminate this Lease as
to the portion of the Leased Premises affected by such subletting
on the Effective Date, as if it were the Expiration Date, in
which case Lessee shall promptly execute and deliver to Lessor an
appropriate modification of this Lease in form satisfactory to
Lessor in all respects.
4. with respect to a proposed subletting or proposed
assignment of this Lease, impose such conditions upon Lessor's
consent as Lessor shall determine in its sole discretion.
(D) If Lessor exercises any of its options under Article 7(C)
above, (and if Lessor shall impose conditions upon its consent
and Lessee shall fail to meet any conditions Lessor may impose
upon its consent), Lessor may then lease the Leased Premises or
any portion thereof to Lessee's proposed assignee or sublessee,
as the case may be, without liability whatsoever to Lessee.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Initially, Lessor agrees to replace any glass broken
prior to the start of the Lease Term, and to obliterate any
graffiti on the exterior walls of the Leased Premises.
Thereafter, Lessee covenants and agrees to keep and maintain in
good order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B, if any, attached hereto and
incorporated herein by reference; and further agrees to replace
any of said equipment when necessary, and said replacements shall
become the property of Lessor. Lessee further agrees to be
responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop surfacing),
and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, Lessor may cause such repairs to
be made, but shall not be required to do so, and Lessee shall pay
the cost thereof to Lessor upon demand. It is understood that
Lessee shall pay all expenses and maintenance and repair during
the term of this Lease. If Lessee is not then in default
hereunder, Lessee shall have the right to make repairs and
improvements to the Leased Premises without the consent of Lessor
if such repairs and improvements do not exceed Ten Thousand
Dollars ($10,000.00), provided such repairs or improvements do
not affect the structural integrity of the Leased Premises. Any
repairs or improvements in excess of Ten Thousand Dollars
($10,000.00) or affecting the structural integrity of the Leased
Premises may be done only with the prior written consent of
Lessor, such consent not to be unreasonably withheld or delayed.
All alterations and additions to the Leased Premises shall be
made in accordance with all applicable laws and shall remain for
the benefit of Lessor. In the event of making such alterations
as herein provided, Lessee further agrees to indemnify and save
harmless Lessor from all expense, liens, claims or damages to
either persons or property or the Leased Premises which may arise
out of or result from the undertaking or making of said repairs,
improvements, alterations or additions, or Lessee's failure to
make said repairs, improvements, alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise agreements
required for operation of the Leased Premises in accordance with
Article 14 hereof.
ARTICLE l0. SIGNS
Lessee shall have the right to install and maintain a sign or
signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE ll. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part. Lessor also
reserves the right and privilege to subject and subordinate this
Lease at all times to any and all advances to be made under such
mortgages, and all renewals, modifications, extensions,
consolidations, and replacements thereof, provided such mortgagee
shall execute its standard form, commercially reasonable
subordination, attornment and non-disturbance agreement.
(B) Lessee covenants and agrees to execute and deliver, upon
demand, such further instrument or instruments subordinating this
Lease on the foregoing basis to the lien of any such mortgage or
mortgages as shall be desired by Lessor and any proposed
mortgagee or proposed mortgagees.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party contractor or
architect approved by Lessor, for the purposes for which the
Leased Premises were leased, then Lessor and Lessee shall each
have the right to terminate this Lease on thirty (30) days notice
to the other given within ninety (90) days after the date of such
taking. In the event that this Lease shall terminate or be
terminated, the Rent shall be paid up to the day that possession
was surrendered.
(B) If any part of the Leased Premises shall be so taken such
that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee. This lease shall be deemed amended to
reflect the taking in the legal description of the Leased
Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE l3. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within one hundred eighty (180)
days of the expiration or termination of the Lease, Lessee agrees
to allow Lessor to then place "For Sale" or "For Rent" signs on
the Leased Premises.
ARTICLE l4. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
casual dining sit-down restaurant. Lessee acknowledges and
agrees that any other use without the prior written consent of
Lessor will constitute a default under and a violation and breach
of this Lease. Lessee agrees: to operate all of the Leased
Premises during the Term or Renewal Terms during regular and
customary hours for businesses similar to the permitted exclusive
use stated herein, unless prevented from doing so by causes
beyond Lessee's control or due to permitted periods of remodel or
repair; and to conduct its business in a first class and
reputable manner in order to maximize sales and Rents payable to
Lessor.
(B) If the Leased Premises are not operated as a casual
dining sit-down restaurant, or remain closed for fourteen (14)
consecutive days, then Lessee shall be in default hereunder and
Lessor may, at its option, cancel this Lease by giving written
notice to Lessee or exercise any other right or remedy that
Lessor may have; provided, however, that reasonable closings
shall be permitted for replacement of trade fixtures or during
periods of remodel or repair after destruction.
(C) In the event this Lease is terminated or canceled
pursuant to this Article, Lessee shall remain liable for the
payment of all Rents due to Lessor under this Lease for the full
remaining term in accordance with the applicable terms and
provisions of this Lease Agreement, offset by Rent generated
under a lease agreement with any new tenant. Provided, however,
that Lessor shall have no affirmative duty to mitigate Lessee's
liability hereunder.
ARTICLE l5. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. The Leased Premises shall be
so restored or rebuilt so as to be of at least equal value and
substantially the same character as prior to such damage or
destruction. If the insurance proceeds are less than Ten
Thousand Dollars ($10,000), they shall be paid to Lessee for such
repair and restoration. If the insurance proceeds are greater
than or equal to Ten Thousand Dollars ($10,000), they shall be
deposited by Lessee and Lessor into a customary construction
escrow at a nationally recognized title insurance company, or at
Lessee's option, with Lessor ("Escrowee") and shall be made
available from time to time to Lessee for such repair and
restoration. Such proceeds shall be disbursed in conformity with
the terms and conditions of a commercially reasonable
construction loan agreement. Lessee shall, in either instance,
deliver to Lessor or Escrowee (as the case may be) satisfactory
evidence of the estimated cost of completion together with such
architect's certificates, waivers of lien, contractor's sworn
statements and other evidence of cost and of payments as the
Lessor or Escrowee may reasonably require and approve. If the
estimated cost of the work exceeds Ten Percent (10%) of the
original cost to Lessor to acquire its interest in the Lease
Premises from Lessee, all plans and specifications for such
rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to complete construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement.
ARTICLE l6. ACTS OF DEFAULT
(A) Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
1. Failure to pay the Rent or any monetary obligation
herein reserved, or any part thereof when the same shall be due
and payable. Interest and late charges for failure to pay Rent
when due shall accrue from the first date such Rent was due and
payable.
2. Failure to do, observe, keep and perform any of the
other terms, covenants, conditions, agreements and provisions in
this Lease to be done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have twenty (20) days after
written notice from Lessor within which to cure such default, or
such longer time as may be reasonably necessary if such default
cannot reasonably be cured within twenty (20) days, if Lessee is
diligently pursuing a course of conduct that in Lessor's
reasonable opinion is capable of curing such default, but in any
event such longer time shall not exceed 90 days after written
notice from Lessor of the default hereunder.
3. The abandonment of the premises by Lessee, the
adjudication of Lessee as a bankrupt, the making by Lessee of a
general assignment for the benefit of creditors, the taking by
Lessee of the benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in bankruptcy for
Lessee property, or the appointment of a temporary receiver which
is not vacated or set aside within sixty (60) days from the date
of such appointment.
ARTICLE l7. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any time
thereafter, Lessor may serve a written notice upon Lessee that
Lessor elects to terminate this Lease. This Lease shall then
terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original term
as set forth in Article 19, notwithstanding any earlier
termination of the Lease hereunder, preserving unto Lessor the
benefit of its bargained-for rental payments.
ARTICLE l8. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee, then Lessor or its agents, servants or
representatives, may immediately or at any time thereafter, re-
enter and resume possession of the premises or any part thereof,
and remove all persons and property therefrom, either by summary
dispossess proceedings or by a suitable action or proceeding at
law, or by force or otherwise without being liable for any
damages therefor.
ARTICLE l9. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this Lease
or should it take possession pursuant to legal proceedings or
pursuant to any notice provided for by law, it may either (i)
terminate this Lease or (ii) it may from time to time, without
terminating the contractual obligation of Lessee to pay Rent
under this Lease, make such alterations and repairs as may be
necessary to relet the Leased Premises or any part thereof for
such Term or Renewal Terms, at such Rent or Rents, and upon such
other terms and conditions as Lessor in its sole discretion may
deem advisable. Termination of Lessee's right to possession by
Court Order shall be sufficient evidence of the termination of
Lessee's possessory rights under this Lease.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any indebtedness other than
Rent due hereunder from Lessee to Lessor;
2. Second, to the payment of any costs and expenses of
such reletting, including brokerage fees and attorney's fees and
of costs of such alterations and repairs;
3. Third, to the payment of Rent and other monetary
obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be held by Lessor
and applied in payment of future Rent as the same may become due
and payable hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any breach, including: The cost of
recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
8% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet) for
the remainder of the Term, all of which amounts shall be
immediately due and payable from Lessee to Lessor in full. In
the event that the Rent obtained from such alternative or
substitute tenant is more than the Rent which Lessee is obligated
to pay under this Lease, then such excess shall be paid to Lessor
provided that Lessor shall credit such excess against the
outstanding obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, doors, heating,
electrical wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the Personalty or equipment owned by Lessor and
leased to Lessee hereunder (as specifically set forth on Exhibit
B attached hereto) and incorporated herein by reference, shall be
the property of Lessor. All trade fixtures and all other
fixtures and articles of personal property owned by Lessee shall
remain the property of Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs (except for such items, if
any, described in Article 20(A) above, as owned by Lessor).
Provided Lessee is not in default hereunder, Lessor will agree
that its interest in the personal property of Lessee will be
subordinated to financing which may exist or which Lessee may
cause to exist in the future on that same personal property.
(C) At the end of the term of this Lease, the Lessee's
property described at Article 20(B) above, after written notice
to Lessor given at least ten (10) days prior thereto, may be
removed from the Leased Premises by Lessee regardless of whether
or not such property is attached to the Leased Premises so as to
constitute a "fixture" within the meaning of the law; however,
all damages and repairs to the Leased Premises which may be
caused by the removal of such property shall be paid for by
Lessee.
ARTICLE 2l. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within twenty (20) days from the date of the
filing of said mechanic's or other lien and delivery of notice
thereof to Lessee of Lessee's obligation under this Lease.
Should Lessee fail to take the foregoing steps within said twenty
(20) day period, Lessor shall have the right, among other things,
to pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the premises. The failure of Lessor to seek
redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH BY LESSEE - PAYMENT OF LESSOR'S COSTS AND
ATTORNEYS' FEES
Lessee agrees to pay and discharge all reasonable costs, and
actual attorneys' fees and expenses that shall be incurred by
Lessor in enforcing the covenants, conditions and terms of this
Lease or defending against an alleged breach, including the costs
of reletting. Such costs, attorneys' fees, and expenses shall be
considered as Rent as due and owing in addition to any Rent
defined in Article 4 hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (l0) days prior request by the other party, execute,
acknowledge and deliver to the requesting party a statement in
writing, executed by an executive officer of such party,
certifying that: (a) this Lease is unmodified (or if modified
then disclosure of such modification shall be made); (b) this
Lease is in full force and effect; (c) the date to which the Rent
and other charges have been paid; and (d) to the knowledge of the
signer of such certificate that the other party is not in default
in the performance of any covenant, agreement or condition
contained in this Lease, or if a default does exist, specifying
each such default of which the signer may have knowledge. It is
intended that any such statement delivered pursuant to this
Article may be relied upon by any prospective purchaser or
mortgagee of the Leased Premises or any assignee of such
mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within ninety (90)
days after the end of Lessee's fiscal year, furnish its financial
statements of the Lessee. The financial statements shall be
certified as true and correct by the CFO or CEO of Lessee, at the
Lessee's expense, and shall be prepared in conformity with
generally accepted accounting principles. Additionally, during
the term of the Lease, Lessee will within fifteen (15) days from
the end of each quarter of each fiscal year, furnish Lessor with
operating statements of the Leased Premises for such quarter.
Lessor shall have the right to require such operating statements
on a monthly basis. Said quarterly (or monthly, if requested by
Lessor) statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer of Lessee. The financial
statements shall include a balance sheet and related statements
of income, changes in cash funds, changes in capital, and related
notes to financial statements. Lessee shall provide Lessor with
copies of its annual tax returns when the same are filed during
the term of this Lease.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to time
provided such modifications are not substantial and do not
increase any of the Rents or substantially modify any of the
business elements of this Lease.
ARTICLE 28. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor by certified
mail. Notices to either party shall be addressed to the person
and address given on the first page hereof. Lessor and Lessee
may, from time to time, change these addresses by notifying each
other of this change in writing. Notices of overdue Rent may be
sent to Lessee by regular, special delivery, or nationally
recognized overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State of Texas.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the premises
herein leased after the expiration of this Lease and without the
execution of a new lease, it shall be deemed to be occupying said
premises as a tenant from month-to-month, subject to all the
conditions, provisions, and obligations of this Lease insofar as
the same can be applicable to a month-to-month tenancy except
that the monthly installment of Rent shall be increased 200% from
the amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due, Lessor shall have the
right to charge Lessee a late charge of $250.00 per month for
unpaid Rent for each month that any amount of Rent installment
remains unpaid. Said late charge shall commence after such
installment is due and continue until said installment, interest
and all accrued late charges are paid in full.
(H) Any part of the Leased Premises may be conveyed by Lessor
for private or public non-exclusive easement purposes at any
time, provided such easement does not interfere with the business
of Lessee. In such event Lessor shall, at its own cost and
expense, restore the remaining portion of the Leased Premises to
the extent necessary to render it reasonably suitable for the
purposes for which it was leased, all to be done without
adjustments in Rent to be paid by Lessee. All proceeds from any
conveyance of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Rent under Article 4, and any other monetary amounts
required by this Lease to be paid by Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor to
obtain and use at Lessor's expense promotional photographs of the
Leased Premises, to the extent permitted by Lessee's franchisor.
ARTICLE 29. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein it
is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity.
ARTICLE 30. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it will not use or permit the
Leased Premises to be used, whether directly or through
contractors, agents or tenants, for the generating, transporting,
treating, storage, manufacture, emission of, or disposal of any
dangerous, toxic or hazardous pollutants, chemicals, wastes or
substances as defined in the Federal Comprehensive Environmental
Response Compensation and Liability Act of 1980 ("CERCLA"), the
Federal Resource Conservation and Recovery Act of 1976 ("RCRA"),
or any other federal, state or local environmental laws,
statutes, regulations, requirements and ordinances ("Hazardous
Materials"); (ii) that there have been no investigations or
reports involving Lessee by any governmental authority which in
any way pertain to Hazardous Materials (iii) that the operation
of the Leased Premises will not violate any federal, state or
local law, regulation, ordinance or requirement governing
Hazardous Materials; (iv) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to Lessor by Lessee at the time of
execution and delivery of this Lease. Lessee agrees to indemnify
and reimburse Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties, and
(b) any loss, damage, expense or cost arising out of or
incurred by Lessor which is the result of a breach of,
misstatement of or misrepresentation of the above covenants,
representations and warranties, and
(c) any and all liability of any kind whatsoever which Lessor
may, for any cause and at any time, sustain or incur by reason of
Hazardous Materials placed or released on the Leased Premises by
Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the highest rate of interest
allowed by law and shall become immediately due and payable in
full on demand of Lessor, its successors and assigns. Lessee
shall not be responsible for any liabilities under this Article
if the liability results from activities of Lessor or any agent,
employee, or contractor of Lessor.
ARTICLE 31. ESCROWS
Lessee shall deposit with Lessor on the first day of each and
every month, an amount equal to one-twelfth (1/12th) of the
estimated annual real estate taxes and assessments and insurance
("Charges") due on the Leased Premises, or such higher amounts
reasonably determined by Lessor as necessary to accumulate such
amounts to enable Lessor to pay all charges due and owing at
least thirty (30) days prior to the date such amounts are due and
payable. From time to time out of such deposits Lessor will,
upon the presentation to Lessor by Lessee of the bills therefor,
pay the Charges or will upon presentation of receipted bills
therefor, reimburse Lessee for such payments made by Lessee. In
the event the deposits on hand shall not be sufficient to pay all
of the estimated Charges when the same shall become due from time
to time or the prior payments shall be less than the currently
estimated monthly amounts, then Lessee shall pay to Lessor on
demand any amount necessary to make up the deficiency. The
excess of any such deposits shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure the default, in such order and manner as Lessor may
elect.
ARTICLE 32. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 33. OPTION TO RENEW
If this Lease is not previously canceled or terminated and if
Lessee has materially complied with and performed all of the
covenants and conditions in this Lease after applicable cure
periods and is not currently in default, then Lessee shall have
the option to renew this Lease upon the same conditions and
covenants contained in this Lease for Three (3) consecutive
periods of Two (2) years each (singularly "Renewal Term"). Rent
during the Renewal Term shall increase as follows: Lease Years
Three and Four shall be at the monthly Rent of $3,300 per month,
Lease Years Five and Six shall be at the monthly Rent of $3,500
per month, and Lease Years Seven and Eight shall be at the
monthly Rent of $3,710 per month.
The first Renewal Term will commence on the day following the
date the original Term expires and successive Renewal Terms would
commence on the day following the last day of the then expiring
Renewal Term. Lessee must give ninety (90) days written notice
to Lessor of its intent to exercise this option prior to the
expiration of the original Term of this Lease or any Renewal
Term, as the case may be.
ARTICLE 34. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee a right of first refusal (the "Right of
First Refusal") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF RIGHT OF FIRST REFUSAL. The Right of First
Refusal and all rights and privileges of Lessee hereunder shall
be in force at the beginning of this Lease until the expiration
of Lessee's right to possession.
(B) MANNER OF EXERCISING RIGHT OF FIRST REFUSAL. If Lessor
("Selling Lessor") shall desire to sell all or any portion of its
interest in the Leased Premises (subject to the terms of this
Lease), Selling Lessor shall give Lessee written notice of
Selling Lessor's intention to sell Selling Lessor's interest
(partial or whole) in the Leased Premises. Such notice
("Lessor's Notice") shall give Selling Lessor's name and address
and state a price at which Selling Lessor intends to sell and
will sell a specified portion or all of its interest in the fee
simple to the Leased Premises. If Lessee shall fail to exercise
its Right of First Refusal as set forth herein, the terms of
Article 34(E) shall apply. For twenty (20) business days
following the giving of such notice, Lessee shall have the option
to purchase such portion of the fee interest of the Selling
Lessor as set forth in Lessor's Notice at the price in cash
stated in the Lessor's Notice. A written notice in substantially
the following form, addressed to Selling Lessor and signed by
Lessee and given, in accordance with the provisions of Article
28(A) hereof, within the period for exercising the Right of First
Refusal, submitted with a bank cashier's check or money order
payable to the order of Selling Lessor in the amount of $5,000.00
(the "Earnest Money") shall be an effective exercise of Lessee's
Right of First Refusal, to wit:
(date)
"We hereby exercise the Right of First Refusal to purchase such
portion of the fee interest of the Selling Lessor (as set forth
in Lessor's Notice) in the property commonly known as 54 South
Expressway, Brownsville, Texas, pursuant to the Right of First
Refusal contained in that certain Net Lease Agreement between us
pertaining to said premises."
(C) TERMS OF SALE IF RIGHT OF FIRST REFUSAL EXERCISED. Upon
Lessee's exercise of the Right of First Refusal in accordance
with the provisions of subparagraph (B) hereof, Selling Lessor
shall be obligated to sell and convey by recordable general
warranty deed, good and indefeasible title to its interest in the
Leased Premises (or such portion thereof as set forth in Lessor's
Notice) subject only to the matters affecting title which were of
record at the time Selling Lessor came into title to the Leased
Premises and those matters which Lessee created, suffered or
permitted to accrue during the term hereof, and Lessee shall be
obligated to purchase such Lessor's interest upon the following
terms and conditions:
(i) PRICE. The price "Purchase Price" at which Selling
Lessor shall sell and Lessee shall purchase the Leased Premises
shall be the price stated in Lessor's Notice.
(ii) CLOSING. Closing shall be sixty (60) days after the
expiration of the twenty days within which Lessee may exercise
its Right of First Refusal, unless the parties mutually agree
otherwise. The Purchase Price less credit for the Earnest Money
and any other credits to which Lessee is entitled hereunder shall
be tendered in cash or other certified funds by Lessee at
Closing.
(iii) EVIDENCE OF TITLE. Not less than ten (10) days prior to
closing, Selling Lessor shall obtain a commitment for an TLTA
owner's policy of title insurance dated within thirty (30) days
of the closing date, issued by a nationally recognized title
insurance company selected by Selling Lessor (the "Title
Company") in the amount of the Purchase Price determined pursuant
to subparagraph (C)(i) above, naming Lessee as the proposed
insured, and covering the fee simple title to the Leased
Premises, and showing Selling Lessor vested with good title to
portion of the Leased Premises being sold, subject only to the
matters affecting title which were of record at the time Selling
Lessor came into title to the Leased Premises and those matters
which Lessee created, suffered or permitted to accrue during the
term hereof. Such title commitment shall be conclusive evidence
of good title. If Lessee shall make objection to the
marketability of title, Selling Lessor shall have no obligation
to make title marketable, but may withdraw Lessor's notice of
intent to market the Premises.
(iv) PRORATIONS. Selling Lessor shall pay the cost of the
aforesaid title policy and any and all state and municipal taxes
imposed by law on the transfer of the title to the Leased
Premises, or the transaction pursuant to which such transfer
occurs. Water, sewer and other utility charges, if any, which
are not metered, driveway permit charges, if any, general real
estate taxes, and other similar items, shall be adjusted ratably
as of the Closing, except to the extent otherwise settled between
the parties pursuant to other provisions of this Lease. A
prorated portion of the Rent prepaid by Lessee for the month of
closing shall be credited toward the Purchase Price and Lessee
shall be given a credit for rent prepaid for any period after the
month in which the Closing occurs. Otherwise, Lessee shall not
receive a credit against the Purchase Price for Rent paid
hereunder.
(v) ESCROW CLOSING. At the election of Selling Lessor or
Lessee upon notice to the other party not less than five (5) days
prior to the Closing, this sale shall be closed through an escrow
with the Title Company, in accordance with the general provisions
of the usual form of Deed and Money Escrow Agreement then in use
by said company, with such special provisions inserted in the
escrow agreement as may be required to conform with this
agreement. Upon the creation of such an escrow, anything herein
to the contrary notwithstanding, paying of the purchase price and
delivery of the deed shall be made through the escrow. The cost
of the escrow shall be divided equally between the Selling Lessor
and Lessee. If for any reason other than Lessee's default, the
transaction fails to close, the Earnest Money shall be returned
to Lessee forthwith.
(vi) REMEDIES ON DEFAULT. If Lessee defaults under the
provisions of this subparagraph 34(C), Selling Lessor shall have
the right to annul the provisions of this paragraph 34 by giving
Lessee notice of such election, provided that Selling Lessor has
first notified Lessee of such default and Lessee has failed to
cure the same within ten (10) days after such notice. Upon
Selling Lessor's notice of annulment in accordance herewith, the
Earnest Money shall be forfeited and paid to Selling Lessor as
liquidated damages, which shall be Selling Lessor's sole and
exclusive remedy. If Selling Lessor defaults under the
provisions of this subparagraph 34(C) and fails to cure such
default within ten (10) days after being notified of the same by
Lessee, then in such event, (i) the Earnest Money at Lessee's
election and immediately upon its demand shall be returned to
Lessee, which return shall not, however, in any way release or
absolve Selling Lessor from its obligations hereunder and (ii)
Lessee shall be entitled to all remedies (both legal and
equitable) the law (both statutory and decisional) of the state
in which the Leased Premises is situated provides without first
having to tender the balance of the purchase price as a condition
precedent thereof and without having to make any election of such
remedies.
(D) EFFECT OF RIGHT OF FIRST REFUSAL ON LEASE. If the Right
of First Refusal is exercised by Lessee and is exercisable in
Lessor's Notice as to the entire fee simple, this Lease shall
continue in full force and effect until the Closing hereinabove
specified. If the Right of First Refusal is exercised only as to
all of an undivided portion of the fee simple to the Leased
Premises, the Lease shall remain in full force and effect without
merger or termination of this Lease because of such purchase. If
for any reason such Closing fails to occur, this Lease shall
continue in full force and effect, except that if the provisions
of this paragraph 34 are annulled by Selling Lessor, in
accordance with subparagraph 34(C)(vi), by reason of a default by
Lessee, this Lease shall continue but without the provisions of
this paragraph 34 being a part hereof.
(E) If Lessee fails to exercise its Right of First Refusal,
Selling Lessor shall be free to sell all or any portion of its
interest in the Leased Premises for six months following the
expiration of the twenty days within which Lessee may exercise
its Right of First Refusal, provided that the Selling Lessor
giving such Lessor's Notice shall sell its interest (or a portion
thereof) for a price equal to or greater than the price (or the
pro-rata portion thereof if a portion of the Selling Lessor's
interest in the Leased Premises is sold) set forth in Lessor's
Notice. This Right of First Refusal shall survive any sale of
the Leased Premises and shall apply to any subsequent sale or
potential sale by Lessor or its successors and assigns.
ARTICLE 35. OPTION TO PURCHASE
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee the exclusive and irrevocable option (the
"Option") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) DURATION OF OPTION. Provided Lessee shall not be in
default hereunder, the Option and all rights and privileges of
Lessee hereunder shall be in force for the period commencing at
the beginning of the First Lease Year and continuing until the
last day of the Fifth Lease Year (if the Lease shall be renewed
and full force and effect.)
(B) MANNER OF EXERCISING OPTION. A written notice in
substantially the following form, addressed to Lessor and signed
by Lessee and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Option,
submitted with a bank cashier's check or money order payable to
the order of Lessor in the amount of $5,000.00 (the "Earnest
Money") shall be an effective exercise of the Option, to wit:
(date)
"We hereby exercise the Option to purchase the property commonly
known as 54 South Expressway, Brownsville, Texas, pursuant to the
option to purchase contained in that certain Net Lease Agreement
between us pertaining to said premises."
(C) TERMS OF SALE IF OPTION EXERCISED. Upon Lessee's
exercise of the Option in accordance with the provisions of
subparagraph (B) hereof, Lessor shall be obligated to sell and
convey by recordable warranty deed, good and marketable title to
the Leased Premises subject only to the matters affecting title
which were of record at the time Lessor came into title to the
Leased Premises and those matters which Lessee created, suffered
or permitted to accrue during the term hereof, and Lessee shall
be obligated to purchase the Premises upon the following terms
and conditions:
(i)PRICE. The price "Purchase Price" at which Lessor shall
sell and Lessee shall purchase the Leased Premises shall be, if
closed during Lease Year One, $500,000, if within Lease Year Two,
$525,000, if within Lease Year Three, $555,000, if within Lease
Year Four, $575,000, if within Lease Year Five $605,000.
(ii)CLOSING. Closing shall be thirty (30) days after the
Option is exercised, unless the parties mutually agree otherwise.
The Purchase Price less credit for the Earnest Money shall be
tendered in cash or other certified funds by Lessee at Closing.
(iii)EVIDENCE OF TITLE. Not less than ten (10) days prior to
closing, Lessee shall obtain a commitment for an ALTA owner's
policy of title insurance dated within thirty (30) days of the
closing date, issued by a nationally recognized title insurance
company of Lessor's choice (the "Title Company") in the amount of
the Purchase Price determined pursuant to subparagraph (C)(i)
above, naming Lessee as the proposed insured, and covering the
fee simple title to the Leased Premises, and showing Lessor
vested with good title to the Leased Premises subject only to the
matters affecting title which were of record at the time Lessor
came into title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during the term
hereof. Such title commitment shall be conclusive evidence of
good title.
(iv)PRORATIONS. Lessor shall pay the cost of the aforesaid
title policy and any and all state and municipal taxes imposed by
law on the transfer of the title to the Leased Premises, or the
transaction pursuant to which such transfer occurs. Water, sewer
and other utility charges, if any, which are not metered,
driveway permit charges, if any, general real estate taxes, and
other similar items, shall be adjusted ratably as of the Closing,
except to the extent otherwise settled between the parties
pursuant to other provisions of this Lease. No portion of the
Base Rent paid by Lessee shall be credited toward the Purchase
Price but Lessee shall be given a credit for rent prepaid for any
period after the Closing.
(v)ESCROW CLOSING. At the election of Lessor or Lessee upon
notice to the other party not less than five (5) days prior to
the Closing, this sale shall be closed through an escrow with the
Title Company, in accordance with the general provisions of the
usual form of Deed and Money Escrow Agreement then is use by said
company, with such special provisions inserted in the escrow
agreement as may be required to conform with this agreement.
Upon the creation of such an escrow, anything herein to the
contrary notwithstanding, paying of the purchase price and
delivery of the deed shall be made through the escrow. The cost
of the escrow shall be divided equally between the Lessor and
Lessee. If for any reason other than Lessee's default, the
transaction fails to close, the Earnest Money shall be returned
to Lessee forthwith.
(vi)REMEDIES ON DEFAULT. If Lessee defaults under the
provisions of this subparagraph 34(C), Lessor shall have the
right to annul the provisions of this paragraph 35 by giving
Lessee notice of such election, provided that Lessor has first
notified Lessee of such default and Lessee has failed to cure the
same within ten (10) days after such notice. Upon Lessor's
notice of annulment in accordance herewith, the Earnest Money
shall be forfeited and paid to Lessor as liquidated damages,
which shall be Lessor's sole and exclusive remedy. If Lessor
defaults under the provisions of this subparagraph 35(C) and
fails to cure such default within ten (10) days after being
notified of the same by Lessee, then in such event, (i) the
Earnest Money at Lessee's election and immediately upon its
demand shall be returned to Lessee, which return shall not,
however, in any way release or absolve Lessor from its
obligations hereunder and (ii) Lessee shall be entitled to all
remedies (both legal and equitable) the law (both statutory and
decisional) of the state in which the Leased Premises are
situated provides without first having to tender the balance of
the purchase price as a condition precedent thereof and without
having to make any election of such remedies.
(D) EFFECT OF OPTION ON LEASE. If the Option is exercised,
this Lease shall continue in full force and effect until the
Closing hereinabove specified. If for any reason such Closing
fails to occur, this Lease shall continue in full force and
effect, except that if the provisions of this paragraph 35 are
annulled by Lessor, in accordance with subparagraph 35(C)(vi), by
reason of a default by Lessee, this Lease shall continue but
without the provisions of this paragraph 35 being a part hereof.
ARTICLE 36 SECURITY DEPOSIT
Lessee shall deliver to Lessor and maintain a Security Deposit
in the amount of $12,500, which AEI may commingle with its own
funds and AEI shall be entitled to any interest earned upon such
Security Deposit, if any interest is earned upon such deposit.
If the Security Deposit is placed upon interest, the risk of loss
shall be borne by Lessor.
Lessor, or its then managing agent, shall have the right to
draw down an amount up to the face amount of the Security Deposit
if such amount is due to Lessor under the terms and conditions of
this lease, and remains unpaid after expiration of any applicable
cure period, if any.
In the event of a transfer of Lessor's interest in the Leased
Premises, Lessor shall have the right to transfer the Security
Deposit to the transferee and thereupon the Lessor shall, without
any further agreement between the parties, be released by Lessee
from all liability therefor, and it is agreed that the provisions
hereof shall apply to every transfer or assignment of said
Security Deposit to a new Lessor.
Lessor may draw down upon the Security Deposit in whole or in
part. Should Lessor, due to a default under this Lease,
including but not limited to this Article, draw down upon the
Security Deposit, Lessor shall apply the same to cure any
defaults of Lessee under this Lease. After any application of
said funds by Lessor, Lessee shall be obligated to immediately
either increase the amount of funds so held by Lessor to the
amount immediately prior to such application of funds, or be in
default under this Lease. Lessor may co-mingle any funds held by
it with any other funds of Lessor. Any cash funds held by Lessor
shall be released to Lessee, if not then default hereunder, upon
termination of the term of this Lease.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease effective as of the day and year first
above written.
LESSEE: /s/ Sergio Gonzalez
By:
Its:
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - LESSOR'S SIGNATURE
ON FOLLOWING PAGE
LESSOR: AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP, a Minnesota limited
partnership
By: AEI FUND MANAGEMENT XVIII, INC.,
a Minnesota corporation
By: /s/ Robert P Johnson
Robert P. Johnson, President
EXHIBIT "A"
BEGINNING at the Northwest corner of Lot 8, Block 17, Colonia
Mexicana Addition, said point being on the South line of
abandoned Midalgo Street, said point being on the East line of an
ally, for the Southwest corner of this tract;
THENCE along the South line of abandoned Hidalgo Street, South 85
degrees 28 minutes East, 238.23 feet to a point on the West right
of way line of U.S. Highway 77 and 83 Expressway for the
Southeast corner of this tract;
THENCE along the said West right of way line, North 1 degree 11
minutes West, 120.80 feet to a point;
THENCE North 58 degrees 48 minutes West, 58.5 feet to a point for
corner;
THENCE North 4 degrees 29 minutes East, 13.55 feet to North line
of Lot 28;
THENCE along the North line of Lot 28, Block 19 and the North
line extended, North 85 degrees 28 minutes West, 148.3 feet to
the present East right of way line of Palm Boulevard for the
Northwest corner of this tract;
THENCE along the present East right of way line of Palm
Boulevard, along a curve to the left with a radius of 103.77
feet, along the distance of 85.80 feet to a point on the West
line of Lot 28, Block 19, Los Ebanos Properties Subdivision, said
point being on the East line of an alley for a corner;
THENCE along the East line of said alley, along the West line and
the West line extended of Lot 28, Block 19, South 0 degrees 30
minutes East, 83.76 feet to the PLACE OF BEGINNING;
CONTAINING 0.795 acre (34,641 square feet), more or less.
Exhibit B
Walk-In Coolers and Freezers on the Leased Premises as of the
date hereof.
(2) Ventilation Hoods with Fire Systems
FIRST AMENDMENT TO NET LEASE AGREEMENT
THIS AMENDMENT TO NET LEASE AGREEMENT, made and entered
into effective as of the 20th day of November, 1998, by and
between AEI Real Estate Fund XVIII Limited Partnership, a
Minnesota limited partnership whose corporate general partner is
AEI Fund Management XVIII, Inc., a Minnesota corporation ("Fund
XVIII"); AEI Net Lease Income & Growth Fund XIX Limited
Partnership, a Minnesota limited partnership whose corporate
general partner is AEI Fund Management XIX, Inc., a Minnesota
corporation ("Fund XIX"); and Robert P. Johnson ("Johnson"), all
of whose principal business address is 1300 Minnesota World Trade
Center, 30 East Seventh Street, St. Paul, Minnesota 55101
(hereinafter collectively referred to as "Lessor"), and
Tumbleweed, LLC., a Kentucky limited liability company
(hereinafter referred to as "Lessee"), whose principal business
address is 1900 Mellwood Avenue, Louisville, Kentucky;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at Chillicothe, Ohio, and
legally described in Exhibit "A", which is attached hereto and
incorporated herein by reference; and
WHEREAS, Lessee has constructed the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee and Lessor have entered into that certain
Net Lease Agreement dated April 13, 1998 (the ALease@) providing
for the lease of said real property and Building (said real
property and Building hereinafter referred to as the "Leased
Premises"), from Lessor upon the terms and conditions therein
provided in the Lease;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, including the completion of
the Building and other improvements constituting the Leased
Premises, Lessee and Lessor do hereby agree to amend the Lease as
follows:
1. Article 2(A) and (B) of the Lease shall henceforth read as
follows:
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing
November 20th, 1998, plus the period commencing April 13, 1998
("Occupancy Date") through November 20th, with the contemplated
initial term hereof ending on November 30, 2013.
(B) The first full Lease Year shall commence on the date of
this First Amendment and continue through November 30, 1999.
2. Article 4(A) of the Lease shall henceforth read as follows:
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first and second Lease
Years: Lessee shall pay to Lessor an annual Base Rent of
$127,363.93, which amount shall be payable in advance on the
first day of each month in equal monthly installments of $4776.15
to Fund XVIII, $4,245.46 to Fund XIX, and $ 1,592.05 to Robert
P. Johnson. If the first day of the Lease Term is not the first
day of a calendar month, then the monthly Rent payable for that
partial month shall be a prorated portion of the equal monthly
installment of Base Rent.
Article 35 is hereby deleted in its entirety; Lessor and Lessee
agree that the referenced Development Financing Agreement is
terminated in accordance with its terms. All other terms and
conditions of the Lease shall remain in full force and effect.
Lessee has accepted delivery of the Leased Premises and has
entered into occupancy thereof;
Lessee has fully inspected the Premises and found the same to be
as required by the Lease, in good order and repair, and all
conditions under the Lease to be performed by the Lessor have
been satisfied;
As of this date, the Lessor is not in default under any of the
terms, conditions, provisions or agreements of the Lease and the
undersigned has no offsets, claims or defenses against the Lessor
with respect to the Lease.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease as of the day and year first above written.
LESSEE: Tumbleweed, LLC.,
By:/s/ James Mulrooney
Its:EVP & CFO
Witness
/s/ Kristen Sipes
Kristen Sipes
Print Name
Witness
/s/ Tami Embry
Tami Embry
Print Name
STATE OF KENTUCKY )
)SS.
COUNTY OF JEFFERSON)
The foregoing instrument was acknowledged before me this
16th day of November, 1998, by James M Mulrooney, as Exec VP &
CFO of Tumbleweed, LLC, on behalf of said limited liability
company.
/s/ Donna Sanders
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
LESSOR:
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Witness
/s/ Thomas E Lehmann By:/s/ Robert P Johnson
Thomas E Lehmann Robert P. Johnson, President
Print Name
Witness
/s/ Daniel G Happee
Daniel G Happee
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 20th
day of November, 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/ Barbra J Kochevar
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
AEI NET LEASE INCOME & GROWTH FUND XIX
LIMITED PARTNERSHIP
By: AEI Fund Management XIX, Inc.
Witness
/s/ Thomas E Lehmann By: /s/ Robert P Johnson
Thomas E Lehmann Robert P. Johnson, President
Print Name
Witness
/s/ Daniel G Happee
Daniel G Happee
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 20th
day of November, 1998, by Robert P Johnson, the President of AEI
Fund Management XIX, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XIX Limited Partnership,
on behalf of said limited partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
ROBERT P. JOHNSON, INDIVIDUALLY
Witness
/s/ Thomas E Lehmann By:/s/ Robert P Johnson
Thomas E Lehmann Robert P. Johnson
Print Name
Witness
/s/ Daniel G Happee
Daniel G Happee
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 20th
day of November, 1998, by Robert P. Johnson.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
Exhibit "A"
1150 North Bridge Street, Chillicothe, Ohio
Situate in the City of Chillicothe, County of Ross, State of
Ohio, being part of the 15.983 acre tract conveyed to The ABCO
Land Development Corp. And the The Beerman Corporation (Deed Vol.
534 Page 800 Ross County Deed Records), bounded and described as
follows:
Beginning at an iron pin set in the west R/W line of North Bridge
Street (aka State Route 159 and Business Loop U.S. Route 23),
said iron pin being the northeast corner of the 0.723 acre tract
leased to RTM Operating Company, a Delaware Corporation (O.R.
Vol. 77 Page 0691) (Arby's Restaurant);
thence with the north line of said 0.723 acre tract, N 86 deg.
23' 40" W. 150.77 ft. to a Mag-Nail
thence with new lines through the tract of which this is a part
the following (2) courses,
1. N. 03 deg. 36' 20" E. 200.00 ft. to a Mag-Nail set and
2. S. 86 deg. 23' 40" E. 152.29 ft. to a Mag-Nail set;
thence with the west R/W line of North Bridge Street and with the
east line of the tract of which this is a part, S. 04 deg. 02'
25" W. 200.01 ft. to the point of beginning, containing 0.696
acres, subject to all easements and rights-of-way of record
pertinent to this tract.
PURCHASE AGREEMENT FOR FEE SIMPLE UNDIVIDED INTEREST AND
ASSIGNMENT
OF
NET LEASE AGREEMENT
THIS ASSIGNMENT made and entered into this 28th day of
December, 1998, by and between AEI REAL ESTATE FUND XVIII
LIMITED PARTNERSHIP, a Minnesota Limited Partnership,
("Assignor") and AEI NET LEASE INCOME & GROWTH FUND XIX
LIMITED PARTNERSHIP, a Minnesota limited partnership,
("Assignee");
WITNESSETH, that:
WHEREAS, on the 28th day of December, 1998, Assignor
entered into Commitment, Net Lease Agreement, ("the
Agreements") for that certain property located at 6959 East
Broad Street, Columbus, OH (the "Property") with Tumbleweed,
LLC, as Seller/Lessee; and
WHEREAS, Assignor desires to assign an undivided
interest of its rights, title and interest in, to and under
the Agreement and as to the fee simple interest in the
Leased Premises to the Assignees as hereinafter provided;
AEI NET LEASE INCOME & GROWTH FUND XIX
LIMITED PARTNERSHIP 60.00%
undivided interest as tenant in common
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor maintains as tenant in common a forty
percent (40.00%) right, title and interest in, to and
under the Agreements and in the fee simple interest in
the Leased Premises, to have and to hold the same unto
its successors and assigns;
2. Assignor assigns all of its rights, title and
interest in, to and under the Agreements and in the fee
simple interest in the Leased Premises to the Assignee
as noted above, to have and to hold the same unto the
Assignee, its successors and assigns;
3. Assignee hereby assumes all rights, promises,
covenants, conditions and obligations under the
Agreements to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Agreements from this day forward.
4. The Purchase Price paid by the Assignees
designated herein is equal to the prorata share of the
amounts funded as of the date of this Agreement.
All other terms and conditions of the Agreements shall
remain unchanged and continue in full force and effect.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
("Assignor")
BY: AEI FUND MANAGEMENT XVIII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI NET LEASE INCOME & GROWTH FUND XIX
LIMITED PARTNERSHIP ("Assignee")
BY: AEI FUND MANAGEMENT XIX, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
FIRST AMENDMENT TO NET LEASE AGREEMENT
THIS AMENDMENT TO NET LEASE AGREEMENT, made and entered into
effective as of the 28th day of December, 1998, by and between
AEI Real Estate Fund XVIII Limited Partnership, a Minnesota
limited partnership whose corporate general partner is AEI Fund
Management XVIII, Inc., a Minnesota corporation ("Fund XVIII"),
and AEI Net Lease Income & Growth Fund XIX Limited Partnership,
whose corporate general partner is AEI Fund Management XIX, Inc.,
a Minnesota corporation ("Fund XIX"), both of whose principal
business address is 1300 Minnesota World Trade Center, 30 East
Seventh Street, St. Paul, Minnesota 55101 (hereinafter
collectively referred to as "Lessor"), and Tumbleweed, LLC., a
Kentucky limited liability company (hereinafter referred to as
"Lessee"), whose principal business address is 1900 Mellwood
Avenue, Louisville, Kentucky;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at East Broad Street, Columbus,
Ohio, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by reference; and
WHEREAS, Lessee has constructed the building and improvements
(together the "Building") on the real property described in
Exhibit "A", which Building is described in the plans and
specifications heretofore submitted to Lessor; and
WHEREAS, Lessee and Lessor Fund XVIII have entered into that
certain Net Lease Agreement dated May 1, 1998 (the ALease@)
providing for the lease of said real property and Building (said
real property and Building hereinafter referred to as the "Leased
Premises"), from Lessor upon the terms and conditions therein
provided in the Lease;
WHEREAS, Lessor Fund XVIII has sold an undivided 60% interest as
a Tenant in Common in the Leased Premises and the Lease to Fund
XIX;
NOW, THEREFORE, in consideration of the Rents, terms, covenants,
conditions, and agreements hereinafter described to be paid,
kept, and performed by Lessee, including the completion of the
Building and other improvements constituting the Leased Premises,
Lessee and Lessor do hereby agree to amend the Lease as follows:
1. Article 2(A) and (B) of the Lease shall henceforth read as
follows:
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing
December 28th, 1998, plus the period commencing May 1, 1998
("Occupancy Date") through December, 28th, with the contemplated
initial term hereof ending on December 30, 2013.
(B) The first full Lease Year shall commence on the date of this
First Amendment and continue through December 30, 1999.
2. Article 4(A) of the Lease shall henceforth read as follows:
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first and second Lease Years:
Lessee shall pay to Lessor an annual Base Rent of $138,503.13,
which amount shall be payable in advance on the first day of each
month in equal monthly installments of $4,616.77 to Fund XVIII
and of $6,925.16 to Fund XIX. If the first day of the Lease Term
is not the first day of a calendar month, then the monthly Rent
payable for that partial month shall be a prorated portion of the
equal monthly installment of Base Rent.
Article 35 is hereby deleted in its entirety; Lessor and Lessee
agree that the referenced Development Financing Agreement is
terminated in accordance with its terms. All other terms and
conditions of the Lease shall remain in full force and effect.
Lessee has accepted delivery of the Leased Premises and has
entered into occupancy thereof;
Lessee has fully inspected the Premises and found the same to be
as required by the Lease, in good order and repair, and all
conditions under the Lease to be performed by the Lessor have
been satisfied;
As of this date, the Lessor is not in default under any of the
terms, conditions, provisions or agreements of the Lease and the
undersigned has no offsets, claims or defenses against the Lessor
with respect to the Lease.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease as of the day and year first above written.
LESSEE: Tumbleweed, LLC.,
By: /s/ James Mulrooney
Its: Executive Vice President & CFO
Witness
/s/ Tracy Abner
Tracy Abner
Print Name
Witness
/s/ Lisa Hale
Lisa Hale
Print Name
STATE OF KENTUCKY)
)SS.
COUNTY OF JEFFERSON)
The foregoing instrument was acknowledged before me this 23rd day
of December, 1998, by James Mulrooney, as Exec VP & CFO of
Tumbleweed, LLC, on behalf of said limited liability company.
/s/ Donna Sanders
Notary Public
/s/ my commission
expires 6-29-2000
[Remainder of page intentionally left blank]
LESSOR:
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Witness
/s/ Daniel G Happe By: /s/ Robert P Johnson
Daniel G Happe Robert P. Johnson, President
Print Name
Witness
/s/ Rick J Vitale
Rick J Vitale
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 28th day
of December, 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/ Stacey R.E. Jones
Notary Public
[notary seal]
LEASE AMENDMENT, TUMBLEWEED, COLUMBUS, OHIO
[Remainder of page intentionally left blank]
LESSOR:
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
By: AEI Fund Management XIX, Inc.
Witness
/s/ Daniel G Happe By:/s/ Robert P Johnson
Daniel G Happe Robert P. Johnson, President
Print Name
Witness
/s/ Rick J Vitale
Rick J Vitale
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 28th day
of December, 1998, by Robert P Johnson, the President of AEI Fund
Management XIX, Inc., a Minnesota corporation, corporate general
partner of AEI Net Lease Income & Growth Fund XIX Limited
Partnership, on behalf of said limited partnership.
/s/ Stacey R. E. Jones
Notary Public
[notary seal]
LEASE AMENDMENT, TUMBLEWEED, COLUMBUS, OHIO
FIRST AMENDMENT TO NET LEASE AGREEMENT
THIS AMENDMENT TO NET LEASE AGREEMENT, made and entered
into effective as of the 27th day of January, 1999, by and
between AEI Income & Growth Fund XXII Limited Partnership, a
Minnesota limited partnership whose corporate general partner is
AEI Fund Management XXI, Inc., a Minnesota corporation (AFund
XXII@); AEI Income & Growth Fund XXI Limited Partnership, a
Minnesota limited partnership whose corporate general partner is
AEI Fund Management XXI, Inc., a Minnesota corporation (AFund
XXI@); AEI Real Estate Fund XVIII Limited Partnership, a
Minnesota limited partnership whose corporate general partner is
AEI Fund Management XVIII, Inc., a Minnesota corporation ("Fund
XVIII"); and AEI Real Estate Fund XVII Limited Partnership, a
Minnesota limited partnership whose corporate general partner is
AEI Fund Management XVII, Inc., a Minnesota corporation ("Fund
XVII"), all of whose principal business address is 1300 Minnesota
World Trade Center, 30 East Seventh Street, St. Paul, Minnesota
55101 (hereinafter collectively referred to as "Lessor"), and
Americana Dining Corp. (hereinafter referred to as "Lessee"),
whose principal business address is One Corporate Place, 55
Ferncroft Road, Danvers, MA 01923;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at Washington Village Drive,
Dayton, Ohio, and legally described in Exhibit "A", which is
attached hereto and incorporated herein by reference; and
WHEREAS, Lessee has constructed the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee and Lessor Fund XXII have entered into that
certain Net Lease Agreement dated June 29, 1998 (the ALease@)
providing for the lease of said real property and Building (said
real property and Building hereinafter referred to as the "Leased
Premises"), from Lessor upon the terms and conditions therein
provided in the Lease;
Whereas, effective as of August 27, 1998, Lessor Fund XXII
transferred for good value: a 25% undivided interest as tenant in
common in the Leased Premises and the Lease to Fund XXI; a 38%
undivided interest as tenant in common in the Leased Premises
and the Lease to Fund XVIII; and a 14% undivided interest as
tenant in common in the Leased Premises and the Lease to Fund
XVII.
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, including the completion of
the Building and other improvements constituting the Leased
Premises, Lessee and Lessor do hereby agree to amend the Lease as
follows:
1. Article 2(A) and (B) of the Lease shall henceforth read as
follows:
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Twenty (20)
consecutive "Lease Years", as hereinafter defined, commencing
January 27th, 1999, plus the period commencing June 29, 1998
("Occupancy Date") through January 31, 1999 with the contemplated
initial term hereof ending on January 31, 2019.
(B) The first full Lease Year shall commence on the date of
this First Amendment and continue through January 31, 2000.
2. Article 4(A) of the Lease shall henceforth read as follows:
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first and second Lease
Years: Lessee shall pay to Lessor an annual Base Rent of
$405,460.65, which amount shall be payable in advance on the
first day of each month in equal monthly installments of
$7,771.33 to Fund XXII, $8,447.10 to Fund XXI, $12,839.59 to Fund
XVIII, and $ 4,730.37 to Fund XVII. If the first day of the
first full Lease Year of the Lease Term is not the first day of a
calendar month, then the monthly Rent payable for that partial
month shall be a prorated portion of the equal monthly
installment of Base Rent.
Article 35 is hereby deleted in its entirety; Lessor and Lessee
agree that the referenced Development Financing Agreement is
terminated in accordance with its terms. All other terms and
conditions of the Lease shall remain in full force and effect.
Lessee has accepted delivery of the Leased Premises and has
entered into occupancy thereof.
Lessee has fully inspected the Premises and found the same to be
as required by the Lease, in good order and repair, and all
conditions under the Lease to be performed by the Lessor have
been satisfied.
As of this date, the Lessor is not in default under any of the
terms, conditions, provisions or agreements of the Lease and the
undersigned has no offsets, claims or defenses against the Lessor
with respect to the Lease.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease as of the day and year first above written.
LESSEE: Americana Dining Corp.,
By: /s/ Donna Depoian
Its: Secretary
Attest
/s/ Muriel Smith
Muriel Smith
Print Name
Attest
/s/ Cheryl N Carver
Cheryl N Carver
Print Name
STATE OF MASSACHUSETTS)
)SS.
COUNTY OF ESSEX)
The foregoing instrument was acknowledged before me this
25th day of January 1999, by Donna Depoian, as Secretary of
Americana Dining Corp. on behalf of said company.
/s/ Donna M Luciano [notary seal]
Notary Public
[Remainder of page intentionally left blank]
LESSOR: AEI INCOME & GROWTH FUND XXII
LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
Attest
/s/ Rick J Vitale By:/s/ Robert P Johnson
Rick J Vitale Robert P. Johnson, President
Print Name
Attest
/s/ Stacey R.E. Jones
Stacey R.E. Jones
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 26th
day of January, 1999, by Robert P Johnson, the President of AEI
Fund Management XXI, Inc., a Minnesota corporation, corporate
general partner of AEI Income & Growth Fund XXII Limited
Partnership, on behalf of said limited partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
AEI INCOME & GROWTH FUND XXI
LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
Attest
/s/ Rick J Vitale By:/s/ Robert P Johnson
Rick J Vitale Robert P. Johnson, President
Print Name
Attest
/s/ Stacey R.E. Jones
Stacey R.E. Jones
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 26th
day of January, 1999, by Robert P Johnson, the Presient of AEI
Fund Management XXI, Inc., a Minnesota corporation, corporate
general partner of AEI Income & Growth Fund XXI Limited
Partnership, on behalf of said limited partnership.
/s/ Barbara J Kochevar
[notary seal]
[Remainder of page intentionally left blank]
AEI REAL ESTATE FUND XVIII
LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Attest
/s/ Rick J Vitale By:/s/ Robert P Johnson
Rick J Vitale Robert P. Johnson, President
Print Name
Attest
/s/ Stacey R.E. Jones
Stacey R.E. Jones
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 26th
day of January, 1999, 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/ Barbara J Kochevar
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
AEI REAL ESTATE FUND XVII
LIMITED PARTNERSHIP
By: AEI Fund Management XVII, Inc.
Attest
/s/ Rick J Vitale By:/s/ Robert P Johnson
Rick J Vitale Robert P. Johnson, President
Print Name
Attest
/s/ Stacey R.E. Jones
Stacey R.E. Jones
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 26th
day of January, 1999, by Robert P Johnson , the President of AEI
Fund Management XVII, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XVII Limited Partnership,
on behalf of said limited partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
LAWYERS TITLE INSURANCE CORPORATION
EXHIBIT A 2507DC
MF# 94-676-B03
Situate in the Township of Washington, County of Montgomery and
State of Ohio and being Lot Numbered Twelve (12) Washington
Village Park, Section 12, as recorded in Plat Book 155, Page 50
of the plat records of Montgomery County, Ohio ("Lot 12).
Together with a perpetual, nonexclusive easement for vehicular
ingress and egress on, over and across a certain 1.061 acre area,
more or less known as Lot Numbered Thirteen (13) Washington
Village Park, Section Twelve, as recorded in Plat Book 156, Page
50 of the Plat Records of Montgomery County, Ohio ("Lot 13"), a
private roadway presently known as Drexel Park Lane ("Roadway
Easement Area"), to provide ingress and egress between the
Premises and the public roadways presently known as Washington
Village Drive and Lyons Road.
PURCHASE AGREEMENT
Hometown Buffet Restaurant-Tucson, AZ
This AGREEMENT, entered into effective as of the 23 of February,
1999.
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership which owns an undivided 24% interest in the fee title
to that certain real property legally described in the attached
Exhibit "A" (the "Entire Property") Buyer is Linda L. Landes as
trustee of the Linda L. Landes Family Trust, dated May 15, 1992
("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 7.4713 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 $150,000 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, 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.
(b) Buyer will deposit the balance of the purchase price,
$145,000 (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 March 30, 1999.
6. Due Diligence. Buyer will have until the expiration of the
tenth 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
Entire Property 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) A copy 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) A copy of an "as built" survey of the Entire Property
done concurrent with Seller's acquisition of the Property.
(d) Lease (as further set forth in paragraph 11(a) below) 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.
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 AEI Net Lease Income & Growth
Fund XIX Limited Partnership 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, via first class
mail, 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 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,
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 be in default under this Agreement.
Seller may, at its option, retain the First Payment and declare
this Agreement null and void, in which event Buyer will be deemed
to have canceled this Agreement and relinquished all rights in
and to the Property or Seller may exercise its rights under
Section 14 hereof. 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 reasonably 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 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 ten (10) 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 forty (40) 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. Seller has no obligation to spend any funds or make any
effort to satisfy Buyer's objections if any.
Pending satisfaction of Buyer's objections, the payments
hereunder required shall be postponed, but upon satisfaction of
Buyer's objections and within ten (10) days after written notice
of satisfaction of Buyer's
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
objections 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. 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 real estate taxes and 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, which shall be the
responsibility of Seller if Tenant shall not pay the same.
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 share
of all operating expenses of the Entire 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, AEI Net Lease Income
& Growth Fund XIX Limited Partnership, and AEI Institutional
Net Lease Fund '93 Limited Partnership (as "Landlord") and
JB'S Restaurants, Inc. now known as Summit Family
Restaurants Inc. ("Tenant") dated June 16, 1993, and the
Sublease Agreement between JB's Restaurants, Inc. and HTB
Restaurants, Inc., dated June 16, 1993, Seller is not aware
of any leases of the Property. The above referenced lease
agreement also has a first right of refusal in favor of the
Tenant as set forth in Article 34 of said lease agreement,
which right shall apply to any attempted disposition of the
Property by Buyer after this transaction.
(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
permitted in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts 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) Seller has not received any notice of any material,
physical, or mechanical defects of the Entire Property,
including without limitation, the plumbing, heating, air
conditioning, ventilating, electrical system. To the best of
Seller's knowledge without inquiry, 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. If Seller shall
receive any notice to the contrary prior to Closing, Seller
will inform Buyer prior to Closing.
(b) Seller has not received any notice that the use and
operation of the Entire Property is not 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. If Seller
shall receive any notice to the contrary prior to Closing,
Seller will inform Buyer prior to Closing.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the Tenant from using and operating the Entire
Property after the Closing in the manner in which the Entire
Property has been used and operated prior to the date of
this Agreement. If Seller shall receive any notice to the
contrary prior to Closing, Seller will inform Buyer prior to
Closing.
(d) Seller has not received any notice that the Entire
Property is in violation of any federal, state or local law,
ordinance, or regulations relating to industrial hygiene or
the environmental conditions on, under, or about the Entire
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 Entire 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
Entire Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Entire Property arising out of Seller's gross negligence or
intentional misconduct. If Seller shall receive any notice
to the contrary prior to Closing, Seller will inform Buyer
prior to Closing.
(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 Entire Property and such
financial information on the Lessee and Guarantors of the
Lease as Buyer or its advisors shall request, if in Seller's
possession, 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, the Entire
Property and to the Lessee and Guarantors of
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 except as herein set forth. 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 in paragraph 11(a) and (b) above and this
paragraph 12, Seller makes no Warranty or representation,
Express or Implied, or arising by operation of law,
including, but not limited to, any warranty of 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 special warranty deed warranting title
against lawful claims by, through, or under a conveyance
from Seller, but not further or otherwise, conveying
insurable title of the Property to Buyer, subject to the
exceptions 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 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. In addition, 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.
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 reasonably
require 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 Entire Property or any part
thereof should be destroyed or 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 Entire 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).
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 Starker Services, Inc. who
will act as Accommodator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Starker Services, Inc. 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 Starker Services, Inc., Seller will deed the
property to Buyer.
18. Cancellation
If any party elects to cancel this Agreement because of any
breach by another party or because escrow fails to close by
the agreed date, the party electing to cancel shall deliver
to escrow agent a notice containing the address of the party
in breach and stating that this Agreement 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 Agreement 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 March 30, 1999,
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it as set forth herein, 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.
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
(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:
Linda L. Landes, Trustee
5621 Corso Di Napoli
Long Beach, CA 90803
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: LINDA L. LANDES AS TRUSTEE OF THE LINDA L. LANDES
FAMILY TRUST, DATED MAY 15, 1992
By:/s/ Linda L Landes, Trustee
Linda L. Landes, Trustee
Buyer Initial: /s/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
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/ LL
Purchase Agreement for Hometown Buffet-Tucson, AZ
EXHIBIT "A"
That portion of Section 13, Township 14 South; Range 14
East, Gila and Salt River Base and Meridian, Pima County,
Arizona, described as follows:
BEGINNING at the Northeast corner of BRYANT ADDITION
SUBDIVISION, as recorded in Book 12, Page 23, of Maps and
Plats, in the office of the Pima County Recorder;
THENCE North 89 degrees 06 minutes 27 seconds Easst, along
the South right of way line of EAST 14TH STREET, as it now
exists, a distance of 319.42 feet to the TRUE POINT OF
BEGINNING;
THENCE CONTINUE North 89 degrees 06 minutes 27 seconds East,
along the South right of way, a distance of 263.76 feet to a
point of curvature;
THENCE Southeasterly along a circular arc whose central
angle is 90 degrees 07 minutes 312 seconds and a radius of
25 feet, a distance of 39.32 feet to a point of tangency;
THENCE South 00 degrees 46 minutes 02 seconds West, along
the Westerly right of way line of SOUTH WILMOT ROAD, as it
now exists, a distance of 210.86 feet to a point of
curvature;
THENCE Southwesterly along a circular arc whose central
angle is 90 degrees 15 minutes 03 seconds and a radius of 25
feet, a distance of 39.38 feet to a point of tangency;
THENCE South 89 degrees, 29 minutes 01 seconds West, along
the Northerly right of way line of EAST TIMROD STREET, as it
now exists, a distance of 158 feet to a point;
THENCE North 00 degrees 30 minutes 59 seconds West, a
distance of 65 feet to a point;
THENCE South 89 degrees 29 minutes 01 seconds West, a
distance of 55.24 feet to a point;
THENCE North 32 degrees 17 minutes 15 seconds West, a
distance of 40.77 feet to a point;
THENCE North 01 degees 42 minutes 45 seoncds East, a
distance of 103.95 feet to a point;
THENCE South 87 degrees 51 minutes 50 seconds West, a
distance of 32.60 feet to a point;
THENCE North 02 degrees 08 minutes 10 seconds West, a
distance of 56.54 feet to the TRUE POINT OF BEGINNING
PURCHASE AGREEMENT
Hometown Buffet Restaurant-Tucson, AZ
This AGREEMENT, entered into effective as of the 24th of
February, 1999.
l. Parties. Seller is AEI Real Estate Fund XVIII Limited
Partnership which owns an undivided 24% interest in the fee title
to that certain real property legally described in the attached
Exhibit "A" (the "Entire Property") Buyer is Sherrill L. Hossom
as trustee of the Sherrill L. Hossom Family Trust, dated May 15,
1992 ("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 7.4713 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 $150,000 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, 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.
(b) Buyer will deposit the balance of the purchase price,
$145,000 (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 March 30, 1999.
6. Due Diligence. Buyer will have until the expiration of the
tenth 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
Entire Property 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) A copy 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) A copy of an "as built" survey of the Entire Property
done concurrent with Seller's acquisition of the Property.
(d) Lease (as further set forth in paragraph 11(a) below) 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 AEI Net Lease Income & Growth
Fund XIX Limited Partnership and dated
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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, via first class
mail, 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 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,
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 be in default under this Agreement.
Seller may, at its option, retain the First Payment and declare
this Agreement null and void, in which event Buyer will be deemed
to have canceled this Agreement and relinquished all rights in
and to the Property or Seller may exercise its rights under
Section 14 hereof. 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 reasonably 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 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 ten (10) 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 forty (40) 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. Seller has no obligation to spend any funds or make any
effort to satisfy Buyer's objections if any.
Pending satisfaction of Buyer's objections, the payments
hereunder required shall be postponed, but upon satisfaction of
Buyer's objections and within ten (10) days after written notice
of satisfaction of Buyer's objections to the Buyer, the parties
shall perform this Agreement according to its terms.
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
9. Closing Costs. Seller will pay one-half of escrow fees, the
cost of the title commitment and any brokerage commissions
payable. 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 real estate taxes and 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, which shall be the
responsibility of Seller if Tenant shall not pay the same.
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 share
of all operating expenses of the Entire 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, AEI Net Lease Income
& Growth Fund XIX Limited Partnership, and AEI Institutional
Net Lease Fund '93 Limited Partnership (as "Landlord") and
JB'S Restaurants, Inc. now known as Summit Family
Restaurants Inc. ("Tenant") dated June 16, 1993, and the
Sublease Agreement between JB's Restaurants, Inc. and HTB
Restaurants, Inc., dated June 16, 1993, Seller is not aware
of any leases of the Property. The above referenced lease
agreement also has a first right of refusal in favor of the
Tenant as set forth in Article 34 of said lease agreement,
which right shall apply to any attempted disposition of the
Property by Buyer after this transaction.
(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
permitted 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 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
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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) Seller has not received any notice of any material,
physical, or mechanical defects of the Entire Property,
including without limitation, the plumbing, heating, air
conditioning, ventilating, electrical system. To the best of
Seller's knowledge without inquiry, 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. If Seller shall
receive any notice to the contrary prior to Closing, Seller
will inform Buyer prior to Closing.
(b) Seller has not received any notice that the use and
operation of the Entire Property is not 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. If Seller
shall receive any notice to the contrary prior to Closing,
Seller will inform Buyer prior to Closing.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the Tenant from using and operating the Entire
Property after the Closing in the manner in which the Entire
Property has been used and operated prior to the date of
this Agreement. If Seller shall receive any notice to the
contrary prior to Closing, Seller will inform Buyer prior to
Closing.
(d) Seller has not received any notice that the Entire
Property is in violation of any federal, state or local law,
ordinance, or regulations relating to industrial hygiene or
the environmental conditions on, under, or about the Entire
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 Entire 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
Entire Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Entire Property arising out of Seller's gross negligence or
intentional misconduct. If Seller shall receive any notice
to the contrary prior to Closing, Seller will inform Buyer
prior to Closing.
(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 Entire Property and such
financial information on the Lessee and Guarantors of the
Lease as Buyer or its advisors shall request, if in Seller's
possession, 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, the Entire
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 except as
herein set forth. The sale of the Property as
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 in paragraph 11(a) and (b) above and this paragraph
12, Seller makes no Warranty or representation, Express or
Implied, or arising by operation of law, including, but not
limited to, any warranty of 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 special warranty deed warranting title
against lawful claims by, through, or under a conveyance
from Seller, but not further or otherwise, conveying
insurable title of the Property to Buyer, subject to the
exceptions 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 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. In addition, 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/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
assurances as Seller or the Title Company may reasonably
require 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 Entire Property or any part
thereof should be destroyed or 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 Entire 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
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 Starker Services, Inc. who
will act as Accommodator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Starker Services, Inc. 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. Buyer hereby indemnifies
and holds Seller harmless from any claims and/or actions
resulting from said exchange. Pursuant to the direction of
Starker Services, Inc., Seller will deed the property to Buyer.
18. Cancellation
If any party elects to cancel this Agreement because of any
breach by another party or because escrow fails to close by
the agreed date, the party electing to cancel shall deliver
to escrow agent a notice containing the address of the party
in breach and stating that this Agreement 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 Agreement 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 March 30, 1999,
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it as set forth herein, 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/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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:
Sherrill L. Hossom, Trustee
19695 Ridgewood Drive
Bend, OR 97701
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: SHERRILL L. HOSSOM AS TRUSTEE OF THE SHERRILL L. HOSSOM
FAMILY TRUST, DATED MAY 15, 1992
By:/s/ Sherrill L Hossom, Trustee
Sherrill L. Hossom, Trustee
Buyer Initial: /s/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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/ SLH
Purchase Agreement for Hometown Buffet-Tucson, AZ
EXHIBIT "A"
That portion of Section 13, Township 14 South; Range 14
East, Gila and Salt River Base and Meridian, Pima County,
Arizona, described as follows:
BEGINNING at the Northeast corner of Bryant Addition
Subdivision, as recorded in Book 12, Page 23, of Maps and
Plats, in the office of the Pima County Recorder;
THENCE North 89 degrees 06 minutes 27 seconds East, along
the South right of way line of EAST 14TH STREET, as is now
exists, a distance of 319.42 feet to the TRUE POINT OF
BEGINNING;
THENCE CONTINUE North 89 degrees 06 minutes 27 seconds East,
along the South right of way, a distance of 263.76 feet to a
point of curvature;
THENCE Southeasterly along a circular arc whose central
angle is 90 degrees 07 minutes 31 seconds and a radius of 25
feet, a distance of 39.32 feet to a point of tangency;
TEHNCE South 00 degrees 46 minutes 02 seconds West, along
the W4esterly right of way line of SOUTH WILMOT ROAD, as it
now exists, a distance of 210.86 feet to a point of
curvature;
THENCE Southwesterly along a circular arc whose central
angle is 90 degrees 15 minutes 03 seconds and a radius of 25
feet, a distance of 39.38 feet to a point of tangency;
THENCE Sout 89 degrees 29 minutes 01 seconds West, along the
Northerly right of way line of EAST TIMROD STREET, as it now
exists, a distance of 158 feet to a point;
THENCE North 00 degrees 30 minutes 59 seconds West, a
distance of 65 feet to a point;
THENCE Sout 89 degrees 29 minutes 01 seconds West, a
distance of 55.24 feet to a point;
THENCE North 32 degreees 17 minutes 15 seconds West, a
distance of 40.77 feet to a point;
THENCE North 01 degrees 42 minutes 45 seconds East, a
distance of 103.95 feet to a point;
THENCE South 87 degrees 51 minutes 50 seconds West, a
distance of 32.60 feet to a point;
THENCE North 02 degrees 08 minutes 10 seconds West, a
distance of 56.54 feet to the TRUE POINT OF BEGINNING.
PURCHASE AGREEMENT
Hometown Buffet Restaurant-Tucson, AZ
This AGREEMENT, entered into effective as of the 27 of February,
1999.
l. PARTIES. Seller is AEI Real Estate Fund XVIII Limited
Partnership which owns an undivided 24% interest and AEI Net
Lease Income & Growth Fund XIX Limited Partnership which owns and
undivided 47.4415% interest in the fee title to that certain real
property legally described in the attached Exhibit "A" (the
"Entire Property") Buyer is Terry Harsha, Sr. and Janet Sue
Harsha, as joint tenants ("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 9.9617 percentage interest (9.0574% from
Fund XVIII and .9043% from Fund XIX) (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 $200,000 all cash. ($181,844
to Fund XVIII and $18,156 to Fund XIX)
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.
(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 March 1, 1999.
6. DUE DILIGENCE. Buyer will have until the expiration of the
tenth 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
Entire Property 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) A copy 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) A copy of an "as built" survey of the Entire Property
done concurrent with Seller's acquisition of the Property.
(d) Lease (as further set forth in paragraph 11(a) below) 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.
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 AEI Net Lease Income & Growth
Fund XIX Limited Partnership 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, via first class
mail, 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 the first paragraph of section 9 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 be in default under this Agreement.
Seller may, at its option, retain the First Payment and declare
this Agreement null and void, in which event Buyer will be deemed
to have canceled this Agreement and relinquish all rights in and
to the Property or Seller may exercise its rights under Section
14 hereof. 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 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 ten (10) 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. Seller has no obligation to spend any funds or make any
effort to satisfy Buyer's objections if any.
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
Pending satisfaction of Buyer's objections, the payments
hereunder required shall be postponed, but upon satisfaction of
Buyer's objections and within ten (10) days after written notice
of satisfaction of Buyer's objections 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. 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 real estate taxes and 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, which shall be the
responsibility of Seller if Tenant shall not pay the same.
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 share
of all operating expenses of the Entire 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, AEI Net Lease Income &
Growth Fund XIX Limited Partnership, and AEI Institutional
Net Lease Fund '93 Limited Partnership (as "Landlord") and JB'S
Restaurants, Inc. now known as Summit Family Restaurants Inc.
("Tenant") dated June 16, 1993, and the Sublease Agreement
between JB's Restaurants, Inc. and HTB Restaurants, Inc., dated
June 16, 1993, Seller is not aware of any leases of the
Property. The above referenced lease agreement also has a first
right of refusal in favor
of the Tenant as set forth in Article 34 of said lease
agreement, which right shall apply to
any attempted disposition of the Property by Buyer after
this transaction.
(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
permitted in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts 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) Seller has not received any notice of any material,
physical, or mechanical defects of the Entire Property,
including without limitation, the plumbing, heating, air
conditioning, ventilating, electrical system. To the best of
Seller's knowledge without inquiry, 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. If Seller shall
receive any notice to the contrary prior to Closing, Seller
will inform Buyer prior to Closing.
(b) Seller has not received any notice that the use and
operation of the Entire Property is not 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. If Seller
shall receive any notice to the contrary prior to Closing,
Seller will inform Buyer prior to Closing.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the Tenant from using and operating the Entire
Property after the Closing in the manner in which the Entire
Property has been used and operated prior to the date of
this Agreement. If Seller shall receive any notice to the
contrary prior to Closing, Seller will inform Buyer prior to
Closing.
(d) Seller has not received any notice that the Entire
Property is in violation of any federal, state or local law,
ordinance, or regulations relating to industrial hygiene or
the environmental conditions on, under, or about the Entire
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 Entire 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
Entire Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Entire Property arising out of Seller's gross negligence or
intentional misconduct. If Seller shall receive any notice
to the contrary prior to Closing, Seller will inform Buyer
prior to Closing.
(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, if in Seller's
possession, 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
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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 in paragraph 11(a) and (b) above,
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 special warranty deed warranting title
against lawful claims by, through, or under a conveyance
from Seller, but not further or otherwise, conveying
insurable title of the Property to Buyer, subject to the
exceptions 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 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. In addition, 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:
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
(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
should 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).
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
17. BUYER'S 1031 TAX DEFERRED EXCHANGE.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax deferred
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 American Exchange
who will act as Accommodator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Western American Exchange 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 Western American Exchange, Seller will deed the
property to Buyer.
18. CANCELLATION
If any party elects to cancel this Contract because of any
breach by another party or because escrow fails to close by
the agreed date, 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 March 1, 1999, 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
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
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
Attention: Robert P. Johnson
AEI Net Lease Income & Growth Fund XIX Limited
Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Terry Harsha, Sr. and Janet Sue Harsha
730 Chantry Circle
Simi Valley, CA 93065
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: TERRY HARSHA, SR. AND JANET SUE HARSHA AS JOINT TENANTS
By: /s/ Terry Harsha, Sr
Terry Harsha, Sr.
By: /s/ Janet Sue Harsha
Janet Sue Harsha
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 Johnon
Robert P. Johnson, President
and
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED
PARTNERSHIP a Minnesota limited partnership
By: AEI Fund Management XIX Inc., its corporate
general partner
By:/s/ Robert P Johnson
Robert P. Johnson, President
Buyer Initial: /s/ TH /s/ JSH
Purchase Agreement for Hometown Buffet-Tucson, AZ
EXHIBIT "A"
That portion of Section 13, Township 14 South; Range 14 East,
Gila and Salt River Base and Meridian, Pima County, Arizona,
described as follows:
BEGINNING at the Northeast corner of BRYANT ADDITION SUBDIVISION,
as recorded in Book 12, Page 23, of Maps and Plats, in the office
of the Pima County Recorder;
THENCE North 89 degrees 06 minutes 27 seconds East, along the
South right of way line of EAST 14TH STREET, as it now exists, a
distance of 319.42 feet to the TRUE POINT OF BEGINNING;
THENCE CONTINUE North 89 degrees 06 minutes 27 seconds East,
along the South right of way, a distance of 263.76 feet to a
point of curvature;
THENCE Southeasterly along a circular arc whose central angle is
90 degrees 07 minutes 31 seconds and a radius of 25 feet, a
distance of 39.32 feet to a point of tangency;
THENCE South 00 degrees 46 minutes 02 seconds West, along the
Westerly right of way line of SOUTH WILMOT ROAD, as it now
exists, a distance of 210.86 feet to a point of curvature;
THENCE Southwesterly along a circular arc whose central angle is
90 degrees 15 minutes 03 seconds and a radius of 25 feet, a
distance of 39.38 feet to a point of tangency;
THENCE South 89 degrees, 29 minutes 01 seconds West, along the
Northerly right of way line of EAST TIMROD STREET, as it now
exists, a distance of 158 feet to a point;
THENCE North 00 degrees 30 minutes 59 seconds West, a distance of
65 feet to a point;
THENCE South 89 degrees 29 minutes 01 seconds West, a distance of
55.24 feet to a point;
THENCE North 32 degrees 17 minutes 15 seconds West, a distance of
40.77 feet to a point;
THENCE North 01 degrees 42 minutes 45 seconds East, a distance of
103.95 feet to a point;
THENCE South 87 degrees 51 minutes 50 seconds West, a distance of
32.60 feet to a point;
THENCE North 02 degrees 08 minutes 10 seconds West, a distance of
56.54 feet to the TRUE POINT OF BEGINNING.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000840459
<NAME> AEI REAL ESTATE FUND XVIII LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 311,087
<SECURITIES> 0
<RECEIVABLES> 52,928
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 364,015
<PP&E> 16,605,844
<DEPRECIATION> (2,159,173)
<TOTAL-ASSETS> 14,810,686
<CURRENT-LIABILITIES> 229,553
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,581,133
<TOTAL-LIABILITY-AND-EQUITY> 14,810,686
<SALES> 0
<TOTAL-REVENUES> 1,747,913
<CGS> 0
<TOTAL-COSTS> 605,184
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,120,384
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,120,384
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,120,384
<EPS-PRIMARY> 52.29
<EPS-DILUTED> 52.29
</TABLE>
