SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
Of The Securities Exchange Act Of 1934
For the Fiscal Year Ended: December 31, 1996
Commission file number: 0-19838
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
(Name of Small Business Issuer in its Charter)
State of Minnesota 41-1677062
(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No
Check if disclosure of delinquent filers in response to Rule 405
of Regulation S-B is not contained in this Form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Issuer's revenues for year ended December 31, 1996 were
$2,124,542.
As of February 28, 1997, there were 21,010.228 Units of limited
partnership interest in the registrant outstanding and owned by
nonaffiliates of the registrant, which Units had an aggregate
market value (based solely on the price at which they were sold
since there is no ready market for such Units) of $21,010,228.
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 Net Lease Income & Growth Fund XIX 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 14, 1990. The registrant is comprised of
AEI Fund Management XIX, 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 February 5,
1991. The Partnership commenced operations on May 31, 1991 when
minimum subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated February 5, 1993 when the extended offering period
expired. The Partnership received subscriptions for 21,151.928
Limited Partnership Units ($21,151,928).
The Partnership was organized to acquire existing and
newly constructed commercial properties located in the United
States, to lease such properties to tenants under triple net
leases, to hold such properties and to eventually sell such
properties. From subscription proceeds, the Partnership
purchased nineteen properties, including partial interests in
four properties, totaling $16,994,880. 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's properties will be purchased with
subscription proceeds without any indebtedness. The Partnership
will not finance properties in the future to obtain proceeds for
new property acquisitions. If it is required to do so, the
Partnership may incur short-term indebtedness, which may be
secured by a portion of the Partnership's properties, to finance
the day-to-day cash flow requirements of the Partnership
(including cash flow necessary to repurchase Units). The amount
of borrowings that may be secured by the Partnership's properties
is limited in the aggregate to 20% of the purchase price of all
Partnership properties. The Partnership will not incur
borrowings prior to application of the proceeds from sale of the
Units, will not incur borrowings to pay distributions, and will
not incur borrowings while there is cash available for
distributions.
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.
Leases
Although there are variations in the specific terms of the
leases, the following is a summary of the general terms of the
Partnership's leases. The properties are leased to various
tenants under noncancelable triple net leases, which are
classified as operating leases. Under a triple net lease, the
lessee is responsible for all real estate taxes, insurance,
maintenance, repairs and operating expenses for the property.
The initial lease terms are for 15 to 20 years. The leases
provide for base annual rental payments, payable in monthly
installments, and contain rent clauses which entitle the
Partnership to receive additional rent in future years based on
stated rent increases or if gross receipts for the property
exceed certain specified amounts, among other conditions.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
The leases provide the lessees with two to five 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.
Through December 31, 1996, the Partnership sold 87.2636%
of its interest in the Applebee's restaurant in Aurora, Colorado
in seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,414,458 which
resulted in a total net gain of $307,871. The total cost and
related accumulated depreciation of the interests sold was
$1,147,622 and $41,035, respectively. For the year ended
December 31, 1995, the net gain was $166,392.
Through December 31, 1996, the Partnership sold 97.5942%
of the Taco Cabana restaurant in Waco, Texas, in five separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,105,332 which resulted in
a total net gain of $337,012. The total cost and related
accumulated depreciation of the interests sold was $799,998 and
$31,678, respectively. For the year ended December 31, 1995, the
net gain was $92,219.
Through December 31, 1996, the Partnership sold 79.3621%
of the Applebee's restaurant in Temple Terrace, Florida, in six
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,120,177 which
resulted in a total net gain of $307,822. The total cost and
related accumulated depreciation of the interests sold was
$839,853 and $27,498, respectively. For the years ended December
31, 1996 and 1995, the net gain was $102,408 and $109,048,
respectively.
On January 2, 1997, the Partnership sold an additional
11.5416% in the Applebee's restaurant in Temple Terrace, Florida
to an unrelated third party. The Partnership received net sale
proceeds of approximately $177,500 which resulted in a net gain
of approximately $63,000.
Through December 31, 1996, the Partnership sold 98.8946%
of the Applebee's restaurant in Crestview Hills, Kentucky, in
nine separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,627,539 which
resulted in a total net gain of $436,533. The total cost and
related accumulated depreciation of the interests sold was
$1,256,017 and $65,011, respectively. For the years ended
December 31, 1996 and 1995, the net gain was $162,457 and
$155,120, respectively.
On April 5, 1996, the Partnership sold a 12.7585% interest
in the HomeTown Buffet restaurant in Tucson, Arizona to an
unrelated third party. The Partnership received net sale
proceeds of $201,357 which resulted in a net gain of $44,259.
The total cost and related accumulated depreciation of the
interest sold was $164,251 and $7,153, respectively.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. The property was leased to SportsTown,
Inc. under a Lease Agreement with a primary term of 20 years and
annual rental payments of $377,890. The parties own the property
as tenants-in-common under a co-tenancy agreement. On November
30, 1994, the Partnership entered into a written contract to sell
this property. The sale was completed in April, 1995. As a
condition to the sale, the Partnership, and its affiliates,
guaranteed and escrowed the next twelve months of rent
($377,890), in the event that the lessee failed to make the
monthly rental payments. The lessee made the monthly rental
payments, and the escrowed rent was released to the Partnership
and its affiliates.
The parties received net sale proceeds of $3,541,409,
which resulted in a net gain of $454,849. At the time of sale,
the cost and related accumulated depreciation was $3,143,311 and
$56,751, respectively. The Partnership's share of the net sale
proceeds and net gain was $3,284,233 and $419,619, respectively.
On July 26, 1995, the Partnership sold the Black-Eyed Pea
restaurant in Davie, Florida to Jackson Shaw Partners No. 51
Ltd., an affiliate of the lessee. The Partnership recognized net
sale proceeds of $1,741,953 which resulted in a net loss of
$8,574. At the time of sale, the cost and related accumulated
depreciation was $1,781,075 and $30,548, respectively. As part
of the sale proceeds, the Partnership received a Promissory Note
from the buyer in the amount of $1,556,982.
On November 6, 1996, the Partnership sold the Taco Cabana
restaurant in Round Rock, Texas to an unrelated third party. The
Partnership recognized net sale proceeds of approximately
$963,049, which resulted in a net gain of $262,803. The total
cost and related accumulated depreciation was $749,710 and
$49,464, respectively. As part of the net sale proceeds, the
Partnership received a Promissory Note for $660,000. The
purchaser will attempt to use their best efforts to obtain third
party financing to satisfy the Note by May 1, 1997. If not paid
sooner, the entire unpaid principal and interest is due October
1, 2005. The Note bears interest at a 9% rate until May 1, 1997,
then the rate increases to 12%.
On March 28, 1996, the Partnership purchased a 40.75%
interest in a Garden Ridge store in Pineville, North Carolina for
$3,615,378. The property is leased to Garden Ridge L.P. under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $383,973. The remaining interest in the property was
purchased by AEI Net Lease Income & Growth Fund XX Limited
Partnership and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
In August, 1995, the lessee of the three Red Line Burger
and 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 Rally's properties and one
of the Red Line Burger properties. Effective December 1, 1995,
the Partnership amended the Leases to reduce the base rent from
the current annual rent of $43,742 to $15,000 for each property
with additional rent of 6.75% of the amount by which gross
receipts exceed $275,000. In 1997, the reorganization plan
confirmed one Red Line Lease, as amended, and rejected the other
two. In addition, the plan allowed the Rally's properties to be
sold and on February 14, 1997, the Partnership received net sales
proceeds of approximately $500,000, which resulted in a net gain
of approximately $13,000. The Partnership is negotiating to re-
lease or sell the other two Red Line Burger properties in
Houston, Texas. The Partnership did not collect $209,812 of pre-
petition and post-petition rent related to the five properties,
which was not accrued for financial reporting purposes due to the
uncertainty of collection.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
On December 21, 1995, the Partnership purchased a 33.0%
interest in a Media Play retail store in Apple Valley, Minnesota
for $1,389,367. The property was leased to The Musicland Group,
Inc. (MGI) under a Lease Agreement with a primary term of 18
years and annual rental payments of $135,482. The remaining
interest in the property was purchased by AEI Income & Growth
Fund XXI Limited Partnership and AEI Net Lease Income & Growth
Fund XX Limited Partnership, affiliates of the Partnership.
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which is equal to
approximately two years' rent. The Partnership's share of such
payment was $264,000. Under the Agreement, MGI remained in
possession of the property and performed all of its obligations
under the net lease agreement through January 31, 1997 at which
time it vacated the property and made it available for re-let to
another tenant. MGI was responsible for all maintenance and
management costs of the property through January 31, 1997 after
which date the Partnership became responsible for its share of
expenses associated with the property until it is re-let or sold.
A specialist in commercial property leasing has been retained to
locate a new tenant for the property.
Major Tenants
During 1996, four of the Partnership's lessees each
contributed more than ten percent of the Partnership's total
rental revenue. The major tenants in aggregate contributed 74%
of the Partnership's total rental revenue in 1996. It is
anticipated that, based on the minimum rental payments required
under the leases, each major tenant, with the exception of the
Musicland Group, Inc., will continue to contribute more than ten
percent of the Partnership's total rental revenue in 1997 and
future years. In addition, four business concepts, Taco Cabana
and Applebee's restaurants and Garden Ridge and Media Play retail
stores, each accounted for more than ten percent of the
Partnership's total rental revenue during 1996. With the
exception of Media Play, it is anticipated that these business
concepts will continue to account for more than ten percent of
the Partnership's total rental revenue in 1997 and future years.
Any failure of these major tenants or business concepts could
materially affect the Partnership's net income and cash
distributions.
Competition
The Partnership is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Partnership. At the time the Partnership
elects to dispose of its properties, the Partnership will be in
competition with other persons and entities to find buyers for
its properties.
Employees
The Partnership has no direct employees. Management
services are performed for the Partnership by AEI Fund
Management, Inc., an affiliate of AFM.
ITEM 2. DESCRIPTION OF PROPERTIES.
Investment Objectives
The Partnership's investment objectives were to acquire
existing or newly-developed commercial properties throughout the
United States that offer the potential for (i) preservation and
protection of the Partnership's capital; (ii) partially tax-
deferred cash distributions from operations which may increase
through rent participation clauses or mandated rent increases;
and (iii) long-term capital gains through appreciation in value
of the Partnership's properties realized upon sale. The
Partnership does not have a policy, and there is no limitation,
as to the amount or percentage of assets that may be invested in
any one property. However, to the extent possible, the General
Partners attempt to diversify the type and location of the
Partnership's properties.
Description of Properties
The Partnership's properties are all commercial, single
tenant buildings. All the properties were acquired on a debt-free
basis and are leased to various tenants under noncancelable
triple net leases, which are classified as operating leases. The
Partnership holds an undivided fee simple interest in the
properties.
The Partnership's properties are subject to the general
competitive conditions incident to the ownership of single tenant
investment real estate. Since each property is leased under a
long-term lease, there is little competition until the
Partnership decides to sell the property. At this time, the
Partnership will be competing with other real estate owners, on
both a national and local level, in attempting to find buyers for
the properties. In the event of a tenant default, the
Partnership would be competing with other real estate owners, who
have property vacancies, to attract a new tenant to lease the
property. The Partnership's tenants operate in industries that
are very competitive and can be affected by factors such as
changes in regional or local economies, seasonality and changes
in consumer preference.
The following table is a summary of the properties that
the Partnership acquired and owned as of December 31, 1996.
<TABLE>
<C> <S> <S> <S> <S> <S>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
Taco Cabana Restaurant
Houston, TX Texas Taco
(38.2362%) 7/31/91 $ 547,322 Cabana L.P. $ 76,917 $74.50
Taco Cabana Restaurant Texas Taco
San Antonio, TX 3/16/92 $ 1,147,274 Cabana L.P. $ 173,433 $63.76
Taco Cabana Restaurant
Waco, TX Texas Taco
(2.4058%) 5/1/92 $ 19,720 Cabana L.P. $ 2,685 $41.34
Applebee's Restaurant
Aurora, CO RCI
(3.3979%) 12/22/92 $ 44,782 West, Inc. $ 5,847 $37.47
Red Line Burgers Restaurant Red Line
Houston, TX 2/16/93 $ 299,531 Burgers, Inc. $ 21,000 $36.21
Red Line Burgers Restaurant Red Line
Houston, TX 2/16/93 $ 303,629 Houston One, Ltd.$ 21,000 $36.21
Red Line Burgers Restaurant Red Line
Corpus Christi, TX 4/2/93 $ 280,378 Burgers, Inc. $ 15,000 $25.86
Apple Partners
Applebee's Restaurant Limited
Crestwood, MO 4/14/93 $ 803,418 Partnership $ 105,470 $21.03
Applebee's Restaurant
Crestview Hills, KY Thomas
(1.1054%) 6/15/93 $ 14,039 and King, Inc. $ 1,836 $30.49
HomeTown Buffet Restaurant
Tucson, AZ JB's
(47.4415%) 6/16/93 $ 610,755 Restaurants, Inc. $ 80,960 $17.75
Southland Restaurant
Applebee's Restaurant Development
Covington, LA 6/23/93 $ 1,099,085 Company, L.L.C $ 153,319 $28.00
Rally's Restaurant Red Line
Brownsville, TX 7/8/93 $ 281,713 Burgers, Inc. $ 15,000 $25.51
Rally's Restaurant Red Line
Edinburg, TX 7/8/93 $ 281,762 Burgers, Inc. $ 15,000 $25.55
Applebee's Restaurant
Temple Terrace, FL Casual Restaurant
(20.6379%) 10/1/93 $ 218,401 Concepts II, Inc. $ 30,398 $31.74
Apple Partners
Applebee's Restaurant Limited
Beaverton, OR 12/2/93 $ 1,760,079 Partnership $ 221,878 $44.38
Denny's Apple Investment
Apple Valley, CA 5/2/94 $ 1,177,655 Group, Inc. $ 159,477 $30.76
Media Play Retail Store
Apple Valley, MN
(33.0%) 12/21/95 $ 1,389,367 (F1)
Garden Ridge Retail Store
Pineville, NC Garden
(40.75%) 3/28/96 $ 3,615,378 Ridge L.P. $ 383,974 $ 6.67
<F1> The property was vacated on January 31, 1997 and listed
for sale or lease.
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
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 Taco
Cabana in Houston is owned by AEI Real Estate Fund 86-A Limited
Partnership. The remaining interests in the Applebee's in Aurora
is owned by AEI Institutional Net Lease Fund `93 and unrelated
third parties. The remaining interests in the HomeTown Buffet
are owned by AEI Real Estate Fund XVIII and AEI Institutional Net
Lease Fund '93 Limited Partnerships and an unrelated third party.
The remaining interests in the Media Play and Garden Ridge stores
are owned by AEI Net Lease Income & Growth Fund XX and AEI Income
& Growth Fund XXI Limited Partnerships. The remaining interests
in the Taco Cabana in Waco, Texas, and the Applebee's in
Crestview Hills, Kentucky and Temple Terrace, Florida are owned
by unrelated third parties.
For properties owned with affiliates, each Partnership
owns a separate undivided interest in the properties. No
specific agreement or commitment exists between the Partnerships
as to the management of the respective interests in the
properties, and the Partnership that holds more than a 50%
interest does not control decisions over the other Partnership's
interest.
The initial Lease terms are for 15 years except for the
Garden Ridge store, the Applebee's restaurants, the Denny's
restaurant and the HomeTown Buffet restaurant which have Lease
terms of 20 years. The Leases contain renewal options which may
extend the Lease term an additional 15 years, except for the Taco
Cabana restaurants, the Applebee's in Aurora, Colorado, the
Denny's restaurant, and the HomeTown Buffet which have renewal
options that may extend the Lease term an additional 10 years,
and the Garden Ridge store which has a renewal option that may
extend the Lease term an additional 25 years.
Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The General Partners believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.
For tax purposes, the Partnership's properties are
depreciated under the Modified Accelerated Cost Recovery System
(MACRS). The largest depreciable component of a property is the
building which is depreciated, using the straight-line method,
over either 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.
Through December 31, 1996, all properties were 100 percent
occupied by the lessees noted.
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, 1996, there were 1,483 holders of
record of the registrant's Limited Partnership Units. There is
no other class of security outstanding or authorized. The
registrant's Units are not a traded security in any market.
However, the Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1996, seven Limited Partners redeemed a total of
106.2 Partnership Units for $83,145 in accordance with the
Partnership Agreement. In 1995, three Limited Partners redeemed
a total of 30.5 Partnership Units for $25,466. The redemptions
increase the remaining Limited Partners' ownership interest in
the Partnership.
Cash distributions of $18,433 and $21,089 were made to the
General Partners and $1,741,754 and $2,062,326 were made to the
Limited Partners in 1996 and 1995, respectively. The
distributions were made on a quarterly basis and represent Net
Cash Flow, as defined, except as discussed below. These
distributions should not be compared with dividends paid on
capital stock by corporations.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $120,244 and $415,054 of
proceeds from property sales in 1996 and 1995, respectively. The
distributions reduced the Limited Partners' Adjusted Capital
Contributions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
For the years ended December 31, 1996 and 1995, total
rental income, which in 1995, includes the minority interests'
share of rental income, was $1,836,611 and $1,966,165,
respectively. The Partnership's share of 1995 rental income was
$1,623,674. During the same periods, the Partnership earned
investment income of $287,931 and $316,117, respectively. In
1996, the Partnership's share of rental income increased mainly
as a result of rent received on two property acquisitions, rent
increases on nine properties and the Media Play lease buy-out.
The increase in rental income was partially offset by the
property sales and Rally's situation discussed below.
In August, 1995, the lessee of the three Red Line Burger
and 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 Rally's properties and one
of the Red Line Burger properties. Effective December 1, 1995,
the Partnership amended the Leases to reduce the base rent from
the current annual rent of $43,742 to $15,000 for each property
with additional rent of 6.75% of the amount by which gross
receipts exceed $275,000. In 1997, the reorganization plan
confirmed one Red Line Lease, as amended, and rejected the other
two. In addition, the plan allowed the Rally's properties to be
sold and on February 14, 1997, the Partnership received net sales
proceeds of approximately $500,000, which resulted in a net gain
of approximately $13,000. The Partnership is negotiating to re-
lease or sell the other two Red Line Burger properties in
Houston, Texas. The Partnership did not collect $209,812 of pre-
petition and post-petition rent related to the five properties,
which was not accrued for financial reporting purposes due to the
uncertainty of collection.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota has recently experienced
financial difficulties and has aggressively been restructuring
its organization. As part of the restructuring, the Partnership
and MGI reached an agreement in December, 1996 in which MGI would
buy out and terminate the Lease Agreement by making a payment of
$800,000, which is equal to approximately two years' rent. The
Partnership's share of such payment was $264,000. Under the
Agreement, MGI remained in possession of the property and
performed all of its obligations under the net lease agreement
through January 31, 1997 at which time it vacated the property
and made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained to
locate a new tenant for the property.
During the years ended December 31, 1996 and 1995, the
Partnership paid Partnership administration expenses to
affiliated parties of $231,105 and $257,443, 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 $121,486 and $34,825, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs. The increase
in these expenses in 1996, when compared to 1995, is the result
of expenses incurred in 1996 related to the Rally situation
discussed above.
As of December 31, 1996, the Partnership's cash
distribution rate was 8.50%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners are subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants due to inflation and real sales growth, will result
in an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
Liquidity and Capital Resources
During 1996, the Partnership's cash balances decreased
$2,224,593 mainly as a result of reinvesting net sale proceeds in
an additional property as discussed below. For the years ended
December 31, net cash provided by operating activities increased
from $1,466,120 in 1995 to $1,929,889 in 1996 mainly as the
result of an increase in the Partnership's share of rental income
and net timing differences in the collection of payments from the
lessees and the payment of expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. In the years ended December 31,
1996 and 1995, the Partnership generated cash flow from the sale
of real estate, as discussed below, of $1,316,279 and $5,367,636,
respectively. During the same periods, the Partnership expended
$3,588,237 and $1,429,387, respectively, to invest in real
properties (inclusive of acquisition expenses), as the
Partnership continued to reinvest the cash generated from the
property sales.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Through December 31, 1996, the Partnership sold 87.2636%
of its interest in the Applebee's restaurant in Aurora, Colorado
in seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,414,458 which
resulted in a total net gain of $307,871. The total cost and
related accumulated depreciation of the interests sold was
$1,147,622 and $41,035, respectively. For the year ended
December 31, 1995, the net gain was $166,392.
Through December 31, 1996, the Partnership sold 97.5942%
of the Taco Cabana restaurant in Waco, Texas, in five separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,105,332 which resulted in
a total net gain of $337,012. The total cost and related
accumulated depreciation of the interests sold was $799,998 and
$31,678, respectively. For the year ended December 31, 1995, the
net gain was $92,219.
Through December 31, 1996, the Partnership sold 79.3621%
of the Applebee's restaurant in Temple Terrace, Florida, in six
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,120,177 which
resulted in a total net gain of $307,822. The total cost and
related accumulated depreciation of the interests sold was
$839,853 and $27,498, respectively. For the years ended December
31, 1996 and 1995, the net gain was $102,408 and $109,048,
respectively.
On January 2, 1997, the Partnership sold an additional
11.5416% in the Applebee's restaurant in Temple Terrace, Florida
to an unrelated third party. The Partnership received net sale
proceeds of approximately $177,500 which resulted in a net gain
of approximately $63,000.
Through December 31, 1996, the Partnership sold 98.8946%
of the Applebee's restaurant in Crestview Hills, Kentucky, in
nine separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,627,539 which
resulted in a total net gain of $436,533. The total cost and
related accumulated depreciation of the interests sold was
$1,256,017 and $65,011, respectively. For the years ended
December 31, 1996 and 1995, the net gain was $162,457 and
$155,120, respectively.
On April 5, 1996, the Partnership sold a 12.7585% interest
in the HomeTown Buffet restaurant in Tucson, Arizona to an
unrelated third party. The Partnership received net sale
proceeds of $201,357 which resulted in a net gain of $44,259.
The total cost and related accumulated depreciation of the
interest sold was $164,251 and $7,153, respectively.
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. The property was leased to SportsTown,
Inc. under a Lease Agreement with a primary term of 20 years and
annual rental payments of $377,890. The parties own the property
as tenants-in-common under a co-tenancy agreement. On November
30, 1994, the Partnership entered into a written contract to sell
this property. The sale was completed in April, 1995. As a
condition to the sale, the Partnership, and its affiliates,
guaranteed and escrowed the next twelve months of rent
($377,890), in the event that the lessee failed to make the
monthly rental payments. The lessee made the monthly rental
payments, and the escrowed rent was released to the Partnership
and its affiliates.
The parties received net sale proceeds of $3,541,409,
which resulted in a net gain of $454,849. At the time of sale,
the cost and related accumulated depreciation was $3,143,311 and
$56,751, respectively. The Partnership's share of the net sale
proceeds and net gain was $3,284,233 and $419,619, respectively.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On July 26, 1995, the Partnership sold the Black-Eyed Pea
restaurant in Davie, Florida to Jackson Shaw Partners No. 51
Ltd., an affiliate of the lessee. The Partnership recognized net
sale proceeds of $1,741,953 which resulted in a net loss of
$8,574. At the time of sale, the cost and related accumulated
depreciation was $1,781,075 and $30,548, respectively. As part
of the sale proceeds, the Partnership received a Promissory Note
from the buyer in the amount of $1,556,982.
On November 6, 1996, the Partnership sold the Taco Cabana
restaurant in Round Rock, Texas to an unrelated third party. The
Partnership recognized net sale proceeds of approximately
$963,049, which resulted in a net gain of $262,803. The total
cost and related accumulated depreciation was $749,710 and
$49,464, respectively. As part of the net sale proceeds, the
Partnership received a Promissory Note for $660,000. The
purchaser will attempt to use their best efforts to obtain third
party financing to satisfy the Note by May 1, 1997. If not paid
sooner, the entire unpaid principal and interest is due October
1, 2005. The Note bears interest at a 9% rate until May 1, 1997,
then the rate increases to 12%.
On March 28, 1996, the Partnership purchased a 40.75%
interest in a Garden Ridge store in Pineville, North Carolina for
$3,615,378. The property is leased to Garden Ridge L.P. under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $383,973. The remaining interest in the property was
purchased by AEI Net Lease Income & Growth Fund XX Limited
Partnership and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
During 1996 and 1995, the Partnership distributed net sale
proceeds of $121,458 and $419,246, respectively, to the Partners
as part of their regular quarterly distributions which
represented a return of capital of $5.69 and $19.63 per Limited
Partnership Unit, respectively. The remaining net sale proceeds
will either be re-invested in additional properties or
distributed to the Partners in the future.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first week after the end
of each quarter. The Partnership attempts to maintain a stable
distribution rate from quarter to quarter. Redemption payments
are paid to redeeming Partners in the fourth quarter of each
year. In 1995, the Partnership made distributions at a 9.75%
rate which resulted in distributions to the Partners of
$2,083,158. Effective January 1, 1996, the distribution rate was
reduced to 8.50% which resulted in distributions of $1,759,347 to
the 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.
During, 1996, seven Limited Partners redeemed a total of
106.2 Partnership Units for $83,145 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1995, three Limited
Partners redeemed a total of 30.5 Partnership Units for $25,466.
The redemptions increase the remaining Limited Partners'
ownership interest in the Partnership.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 7. FINANCIAL STATEMENTS.
See accompanying index to financial statements.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet as of December 31, 1996 and 1995
Statements for the Years Ended December 31, 1996 and 1995:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Partners:
AEI Net Lease Income & Growth Fund XIX Limited Partnership
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI NET
LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP (a Minnesota
limited partnership) as of December 31, 1996 and 1995 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 Net Lease Income & Growth Fund XIX Limited Partnership as
of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Minneapolis, Minnesota /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 31, 1997 Certified Public Accountants
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,477,783 $ 4,702,376
Receivables 17,842 240,611
Current Portion of Long-Term Notes Receivable 69,049 26,614
----------- -----------
Total Current Assets 2,564,674 4,969,601
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,435,197 5,025,530
Buildings and Equipment 9,459,091 10,210,833
Property Acquisition Costs 29,041 56,182
Accumulated Depreciation (881,049) (736,227)
----------- -----------
Net Investments in Real Estate 13,042,280 14,556,318
----------- -----------
OTHER ASSETS:
Long-Term Notes Receivable -
Net of Current Portion 2,100,919 1,522,211
----------- -----------
Total Assets $17,707,873 $21,048,130
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 37,417 $ 102,248
Distributions Payable 421,057 499,106
----------- -----------
Total Current Liabilities 458,474 601,354
----------- -----------
MINORITY INTEREST 0 3,357,202
PARTNERS' CAPITAL (DEFICIT):
General Partners (7,927) (9,526)
Limited Partners, $1,000 Unit Value;
30,000 Units authorized; 21,152 Units issued;
21,015 and 21,121 Units outstanding in
1996 and 1995, respectively 17,257,326 17,099,100
----------- -----------
Total Partners' Capital 17,249,399 17,089,574
----------- -----------
Total Liabilities and Partners' Capital $17,707,873 $21,048,130
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31
1996 1995
INCOME:
Rent $ 1,836,611 $ 1,966,165
Investment Income 287,931 316,117
----------- -----------
Total Income 2,124,542 2,282,282
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 231,105 257,443
Partnership Administration and Property
Management - Unrelated Parties 121,486 34,825
Depreciation 340,721 369,226
----------- -----------
Total Expenses 693,312 661,494
----------- -----------
OPERATING INCOME 1,431,230 1,620,788
GAIN ON SALE OF REAL ESTATE 571,927 969,054
MINORITY INTEREST IN NET INCOME 0 (311,287)
----------- -----------
NET INCOME $ 2,003,157 $ 2,278,555
=========== ===========
NET INCOME ALLOCATED:
General Partners $ 20,032 $ 22,786
Limited Partners 1,983,125 2,255,769
----------- -----------
$ 2,003,157 $ 2,278,555
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(21,095 and 21,144 weighted average Units
outstanding in 1996 and 1995, respectively.) $ 94.01 $ 106.69
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,003,157 $ 2,278,555
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 340,721 369,226
Gain on Sale of Real Estate (571,927) (969,054)
(Increase) Decrease in Receivables 222,769 (225,122)
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (64,831) 16,915
Minority Interest 0 (4,400)
----------- -----------
Total Adjustments (73,268) (812,435)
----------- -----------
Net Cash Provided By
Operating Activities 1,929,889 1,466,120
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (3,588,237) (1,429,387)
Proceeds from Sale of Real Estate -
Net of Minority Interest 1,316,279 5,367,636
Payments Received on Long-
Term Notes Receivable 38,857 8,157
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (2,233,101) 3,946,406
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (78,049) (850)
Distributions to Partners (1,759,347) (2,083,158)
Redemption Payments (83,985) (25,723)
------------ -----------
Net Cash Used For
Financing Activities (1,921,381) (2,109,731)
------------ -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,224,593) 3,302,795
CASH AND CASH EQUIVALENTS, beginning of period 4,702,376 1,399,581
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,477,783 $ 4,702,376
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Note Receivable Acquired in Sale of Property $ 660,000 $ 1,556,982
=========== ===========
Reclassification of minority interest and
investments in real estate due to use of
the proportionate consolidation method $ 3,357,202
===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (11,223) $16,931,123 $16,919,900 21,151.93
Distributions (20,832) (2,062,326) (2,083,158)
Redemption Payments (257) (25,466) (25,723) (30.50)
Net Income 22,786 2,255,769 2,278,555
---------- ----------- ---------- -----------
BALANCE, December 31, 1995 (9,526) 17,099,100 17,089,574 21,121.43
Distributions (17,593) (1,741,754) (1,759,347)
Redemption Payments (840) (83,145) (83,985) (106.20)
Net Income 20,032 1,983,125 2,003,157
---------- ----------- ----------- ----------
BALANCE, December 31, 1996 $ (7,927) $17,257,326 $17,249,399 21,015.23
========== =========== =========== ==========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) Organization -
AEI Net Lease Income & Growth Fund XIX Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XIX, 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 May 31, 1991 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated February 5, 1993 when the extended offering
period expired. The Partnership received subscriptions for
21,151.928 Limited Partnership Units ($21,151,928).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$21,151,928, 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 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 12% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) any
remaining balance will be distributed 90% to the Limited
Partners and 10% to the General Partners. Distributions to
the Limited Partners will be made pro rata by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated in the same ratio as the last dollar of Net Cash
Flow is distributed. Net losses from operations will be
allocated 98% to the Limited Partners and 2% to the General
Partners.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) Organization - (Continued)
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 12% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% 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.
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.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(2) Summary of Significant Accounting Policies - (Continued)
Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents include cash in checking, cash invested in
money market accounts, certificates of deposit, federal
agency notes and commercial paper with a term of three
months or less.
Income Taxes
The income or loss of the Partnership for federal income
tax reporting purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has
been given to income taxes in the accompanying financial
statements.
The tax return, the qualification of the Partnership as
such for tax purposes, and the amount of distributable
Partnership income or loss are subject to examination by
federal and state taxing authorities. If such an
examination results in changes with respect to the
Partnership qualification or in changes to distributable
Partnership income or loss, the taxable income of the
partners would be adjusted accordingly.
Real Estate
The Partnership's real estate is leased under long-term
triple net leases classified as operating leases. The
Partnership recognizes rental revenue on the accrual
basis according to the terms of the individual leases.
For leases which contain cost of living increases, the
increases are recognized in the year in which they are
effective.
Real estate is recorded at the lower of cost or estimated
net realizable value. The Financial Accounting Standards
Board issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" which is effective for the
Partnership's fiscal year ended December 31, 1996. This
standard requires the Partnership to compare the carrying
amount of its properties to the estimated future cash
flows expected to result from the property and its
eventual disposition. If the sum of the expected future
cash flows is less than the carrying amount of the
property, the Statement requires the Partnership to
recognize an impairment loss by the amount by which the
carrying amount of the property exceeds the fair value of
the property. Adoption of this Statement did not have a
material effect on the Partnership's financial
statements.
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 NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(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.
During the fourth quarter of 1996, as a result of changes
in certain agreements, the Partnership began accounting
for properties owned as tenants-in-common with unrelated
third parties using the proportionate consolidation
method. Each tenant-in-common owns a separate, undivided
interest in the properties. Any tenant-in-common that
holds more than a 50% interest does not control decisions
over the other tenant-in-common interests. The 1996
financial statements reflect only this Partnership's
percentage share of the property's land, building and
equipment, liabilities, revenues and expenses.
In fiscal 1995, for properties owned as tenants-in-common
with unrelated third parties, other than affiliated
partnerships, the Partnership accounted for its interest
under the full consolidation method whereby the unrelated
third parties' interests in the properties were reflected
in the Partnership's financial statements as a minority
interest. For purposes of financial reporting, the
Partnership consolidated properties in which it was the
controlling tenant-in-common despite having only a
minority equity interest in the property.
In both fiscal 1996 and 1995, properties owned in
conjunction with related Partnerships were accounted for
using the proportionate consolidation method.
(3) Related Party Transactions -
On July 31, 1991, the Partnership acquired a 38.2362%
interest in a Taco Cabana restaurant in Houston, Texas. The
remaining interest in the property is owned by AEI Real
Estate Fund 86-A Limited Partnership, an affiliate of the
Partnership. In December 1992, the Partnership purchased a
90.6615% interest in an Applebee's restaurant in Aurora,
Colorado. The remaining interest in the property is owned
by AEI Institutional Net Lease Fund `93, an affiliate of the
Partnership. On June 16, 1993, the Partnership acquired a
60.2% interest in a HomeTown Buffet restaurant in Tucson,
Arizona. The remaining interests in the property is owned
by AEI Real Estate Fund XVIII and AEI Institutional Net
Lease Fund '93 Limited Partnerships, affiliates of the
Partnership. On December 21, 1995, the Partnership acquired
a 33.0% interest in a Media Play retail store in Apple
Valley, Minnesota. On March 28, 1996, the Partnership
acquired a 40.75% interest in a Garden Ridge retail store in
Pineville, North Carolina. The remaining interests in the
Media Play and Garden Ridge stores are owned by AEI Net
Lease Income & Growth Fund XX and AEI Income & Growth Fund
XXI Limited Partnerships, affiliates of the Partnership.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(3) Related Party Transactions - (Continued)
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. In April, 1995, the parties sold
the property to an unrelated buyer. The parties owned the
property as tenants-in-common under a co-tenancy agreement.
The Partnership accounted for its interest using the full
consolidation method.
AFM and AEI received the following compensation and
reimbursements for costs and expenses from the Partnership:
Total Incurred by the Partnership
for the Years Ended December 31
1996 1995
a.AEI and AFM are reimbursed for all costs
incurred in connection with managing the
Partnership's operations, maintaining the
Partnership's books and communicating
the results of operations to the Limited
Partners. $ 231,105 $ 257,443
======== ========
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 and outside audit and
accounting costs, insurance and other
property costs. $ 121,486 $ 34,825
======== ========
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 $70,017 and $46,489
for 1996 and 1995, respectively. $ 27,756 $ 61,290
======== ========
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 NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate -
The Partnership leases its properties to various tenants
through non-cancelable triple net leases, which are
classified as operating leases. Under a triple net lease,
the lessee is responsible for all real estate taxes,
insurance, maintenance, repairs and operating expenses of
the property. The initial Lease terms are for 15 years
except for the Garden Ridge store, the Applebee's
restaurants, the Denny's restaurant and the HomeTown Buffet
restaurant which have Lease terms of 20 years. The Leases
contain renewal options which may extend the Lease term an
additional 15 years, except for the Taco Cabana restaurants,
the Applebee's in Aurora, Colorado, the Denny's restaurant,
and the HomeTown Buffet which have renewal options that may
extend the Lease term an additional 10 years and the Garden
Ridge store which has a renewal option that may extend the
Lease term an additional 25 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 properties were constructed in 1992,
1993, 1994, 1995 and 1996, except the Taco Cabana in
Houston, Texas, which was constructed in 1987. The
Partnership acquired all properties during 1996, 1995, 1994,
1993, 1992 and 1991. There have been no costs capitalized
as improvements subsequent to the acquisitions.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
For those properties in the table below which do not have
land costs, the lessee has entered into long-term land
leases with unrelated third parties. The cost of the
properties and related accumulated depreciation at December
31, 1996 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Taco Cabana, Houston, TX $ 334,414 $ 212,908 $ 547,322 $ 38,442
Taco Cabana, San Antonio, TX 598,533 548,741 1,147,274 91,201
Taco Cabana, Waco, TX 7,788 11,932 19,720 1,911
Applebee's, Aurora, CO 15,969 28,813 44,782 4,309
Red Line Burger, Houston, TX 0 299,531 299,531 45,720
Red Line Burger, Houston, TX 0 303,629 303,629 46,290
Red Line Burger, Corpus Christi, TX 0 280,378 280,378 41,367
Applebee's, Crestwood, MO 0 803,418 803,418 104,927
Applebee's, Crestview Hills, KY 4,490 9,549 14,039 1,183
HomeTown Buffet, Tucson, AZ 329,136 281,619 610,755 33,247
Applebee's, Covington, LA 358,521 740,564 1,099,085 95,914
Rally's, Brownsville, TX 0 281,713 281,713 38,392
Rally's, Edinburg, TX 0 281,762 281,762 38,399
Applebee's, Temple Terrace, FL 101,119 117,282 218,401 14,149
Applebee's, Beaverton, OR 636,972 1,123,107 1,760,079 122,594
Denny's, Apple Valley, CA 461,013 716,642 1,177,655 67,081
Media Play, Apple Valley, MN 415,393 973,974 1,389,367 34,835
Garden Ridge, Pineville, NC 1,171,849 2,443,529 3,615,378 61,088
---------- ---------- ---------- ---------
$ 4,435,197 $ 9,459,091 $13,894,288 $ 881,049
========== ========== ========== =========
Through December 31, 1996, the Partnership sold 87.2636% of
its interest in the Applebee's restaurant in Aurora,
Colorado in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,414,458 which resulted in a total net gain of
$307,871. The total cost and related accumulated
depreciation of the interests sold was $1,147,622 and
$41,035, respectively. For the year ended December 31,
1995, the net gain was $166,392.
Through December 31, 1996, the Partnership sold 97.5942% of
the Taco Cabana restaurant in Waco, Texas, in five separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,105,332 which
resulted in a total net gain of $337,012. The total cost
and related accumulated depreciation of the interests sold
was $799,998 and $31,678, respectively. For the year ended
December 31, 1995, the net gain was $92,219.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
Through December 31, 1996, the Partnership sold 79.3621% of
the Applebee's restaurant in Temple Terrace, Florida, in six
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,120,177
which resulted in a total net gain of $307,822. The total
cost and related accumulated depreciation of the interests
sold was $839,853 and $27,498, respectively. For the years
ended December 31, 1996 and 1995, the net gain was $102,408
and $109,048, respectively.
On January 2, 1997, the Partnership sold an additional
11.5416% in the Applebee's restaurant in Temple Terrace,
Florida to an unrelated third party. The Partnership
received net sale proceeds of approximately $177,500 which
resulted in a net gain of approximately $63,000.
Through December 31, 1996, the Partnership sold 98.8946% of
the Applebee's restaurant in Crestview Hills, Kentucky, in
nine separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,627,539
which resulted in a total net gain of $436,533. The total
cost and related accumulated depreciation of the interests
sold was $1,256,017 and $65,011, respectively. For the
years ended December 31, 1996 and 1995, the net gain was
$162,457 and $155,120, respectively.
On April 5, 1996, the Partnership sold a 12.7585% interest
in the HomeTown Buffet restaurant in Tucson, Arizona to an
unrelated third party. The Partnership received net sale
proceeds of $201,357 which resulted in a net gain of
$44,259. The total cost and related accumulated
depreciation of the interest sold was $164,251 and $7,153,
respectively.
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. The property was leased to
SportsTown, Inc. under a Lease Agreement with a primary term
of 20 years and annual rental payments of $377,890. The
parties own the property as tenants-in-common under a co-
tenancy agreement. On November 30, 1994, the Partnership
entered into a written contract to sell this property. The
sale was completed in April, 1995. As a condition to the
sale, the Partnership, and its affiliates, guaranteed and
escrowed the next twelve months of rent ($377,890), in the
event that the lessee failed to make the monthly rental
payments. The lessee made the monthly rental payments, and
the escrowed rent was released to the Partnership and its
affiliates.
The parties received net sale proceeds of $3,541,409, which
resulted in a net gain of $454,849. At the time of sale,
the cost and related accumulated depreciation was $3,143,311
and $56,751, respectively. The Partnership's share of the
net sale proceeds and net gain was $3,284,233 and $419,619,
respectively.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
On July 26, 1995, the Partnership sold the Black-Eyed Pea
restaurant in Davie, Florida to Jackson Shaw Partners No. 51
Ltd., an affiliate of the lessee. The Partnership
recognized net sale proceeds of $1,741,953 which resulted in
a net loss of $8,574. At the time of sale, the cost and
related accumulated depreciation was $1,781,075 and $30,548,
respectively. As part of the sale proceeds, the Partnership
received a Promissory Note from the buyer in the amount of
$1,556,982.
On November 6, 1996, the Partnership sold the Taco Cabana
restaurant in Round Rock, Texas to an unrelated third party.
The Partnership recognized net sale proceeds of
approximately $963,049, which resulted in a net gain of
$262,803. The total cost and related accumulated
depreciation was $749,710 and $49,464, respectively. As
part of the net sale proceeds, the Partnership received a
Promissory Note for $660,000. The purchaser will attempt to
use their best efforts to obtain third party financing to
satisfy the Note by May 1, 1997. If not paid sooner, the
entire unpaid principal and interest is due October 1, 2005.
The Note bears interest at a 9% rate until May 1, 1997, then
the rate increases to 12%.
On March 28, 1996, the Partnership purchased a 40.75%
interest in a Garden Ridge store in Pineville, North
Carolina for $3,615,378. The property is leased to Garden
Ridge L.P. under a Lease Agreement with a primary term of 20
years and annual rental payments of $383,973.
During 1996 and 1995, the Partnership distributed net sale
proceeds of $121,458 and $419,246, respectively, to the
Limited and General Partners as part of their regular
quarterly distributions which represented a return of
capital of $5.69 and $19.63 per Limited Partnership Unit,
respectively. The remaining net sale proceeds will either
be re-invested in additional properties or distributed to
the Partners in the future.
In August, 1995, the lessee of the three Red Line Burger and
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 Rally's
properties and one of the Red Line Burger properties.
Effective December 1, 1995, the Partnership amended the
Leases to reduce the base rent from the current annual rent
of $43,742 to $15,000 for each property with additional rent
of 6.75% of the amount by which gross receipts exceed
$275,000. In 1997, the reorganization plan confirmed one
Red Line Lease, as amended, and rejected the other two. In
addition, the plan allowed the Rally's properties to be sold
and on February 14, 1997, the Partnership received net sales
proceeds of approximately $500,000, which resulted in a net
gain of approximately $13,000. The Partnership is
negotiating to re-lease or sell the other two Red Line
Burger properties in Houston, Texas. The Partnership did
not collect $209,812 of pre-petition and post-petition rent
related to the five properties, which was not accrued for
financial reporting purposes due to the uncertainty of
collection.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(4) Investments in Real Estate - (Continued)
On December 21, 1995, the Partnership purchased a 33.0%
interest in a Media Play retail store in Apple Valley,
Minnesota for $1,389,367. The property was leased to The
Musicland Group, Inc. (MGI) under a Lease Agreement with a
primary term of 18 years and annual rental payments of
$135,482.
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which is equal to
approximately two years' rent. The Partnership's share of
such payment was $264,000. Under the Agreement, MGI
remained in possession of the property and performed all of
its obligations under the net lease agreement through
January 31, 1997 at which time it vacated the property and
made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained
to locate a new tenant for the property.
The Partnership has incurred net costs of $527,142 relating
to the review of potential property acquisitions. Of these
costs, $498,101 have been capitalized and allocated to land,
building and equipment. The remaining costs of $29,041 have
been capitalized and will be allocated to properties
acquired subsequent to December 31, 1996.
The Partnership's share of the minimum future rentals on the
non-cancelable Leases for years subsequent to December 31,
1996 is as follows:
1997 $ 1,438,634
1998 1,452,645
1999 1,481,477
2000 1,511,192
2001 1,538,174
Thereafter 19,916,091
-----------
$ 27,338,213
===========
There were no contingent rents recognized in 1996 or 1995.
(5) Long-Term Notes Receivable -
The Partnership received a Promissory Note from Jackson Shaw
Partners No. 51 Ltd. from the sale of the Black-Eyed Pea
restaurant as discussed in Note 4. The Note requires forty-
eight monthly principal and interest payments of $15,025
with a balloon payment for the outstanding principal and
interest due September 1, 1999. Interest is being charged
on the Note at the rate of 10% on the outstanding principal
balance. The Note is secured by the land, building and
equipment. As of December 31, 1996 and 1995, the
outstanding principal due on the note was $1,522,211 and
$1,548,825, respectively.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(5) Long-Term Notes Receivable - (Continued)
The Partnership received a Promissory Note from the sale of
the Taco Cabana restaurant as discussed in Note 4. The
purchaser will attempt to use their best efforts to obtain
third party financing to satisfy the Note by May 1, 1997.
If not paid sooner, the entire unpaid principal and interest
is due October 1, 2005. The Note bears interest at a 9%
rate until May 1, 1997, then the rate increases to 12%. The
Note is secured by the land, building and equipment. As of
December 31, 1996, the outstanding principal due on the Note
was $647,757.
Scheduled maturities of the long-term notes receivable are
as follows:
1997 $ 69,049
1998 72,363
1999 1,509,317
2000 59,473
2001 71,402
Thereafter 388,364
-----------
$ 2,169,968
===========
(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:
1996 1995
Tenants Industry
Texas Taco Cabana L.P. Restaurant $ 339,661 $ 456,385
Apple Partners L.P. Restaurant 326,159 315,130
The Musicland Group, Inc. Retail 399,481 N/A
Garden Ridge L.P. Retail 292,109 N/A
----------- -----------
Aggregate rent revenue of major tenants $ 1,357,410 $ 771,515
=========== ===========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 74% 39%
=========== ===========
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(7) Partners' Capital -
Cash distributions of $18,433 and $21,089 were made to the
General Partners and $1,741,754 and $2,062,326 were made to
the Limited Partners for the years ended December 31, 1996
and 1995, respectively. The Limited Partners' distributions
represent $82.57 and $97.54 per Limited Partnership Unit
outstanding using 21,095 and 21,144 weighted average Units
in 1996 and 1995, respectively. The distributions represent
$82.57 and $97.54 per Unit of Net Income in 1996 and 1995,
respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $120,244 and $415,054 of
proceeds from property sales in 1996 and 1995, respectively.
The distributions reduced the Limited Partners' Adjusted
Capital Contributions.
Distributions of Net Cash Flow to the General Partners
during 1996 and 1995 were subordinated to the Limited
Partners as required in the Partnership Agreement. As a
result, 99% of distributions and income 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.
During 1996, seven Limited Partners redeemed a total of
106.2 Partnership Units for $83,145 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1995, three Limited
Partners redeemed a total of 30.5 Partnership Units for
$25,466. 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
$973.21 per original $1,000 invested.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(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:
1996 1995
Net Income for Financial
Reporting Purposes $ 2,003,157 $ 2,278,555
Depreciation for Tax Purposes Over
Depreciation for Financial
Reporting Purposes 22,337 (14,630)
Amortization of Start-Up and
Organization Costs (57,331) (157,283)
Income Accrued for Tax Purposes
Over Income for Financial
Reporting Purposes 60,644 33,708
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 43,788 0
Gain on Sale of Real Estate for
Tax Purposes Over (Under) Gain
for Financial Reporting Purposes 16,841 (201)
----------- -----------
Taxable Income to Partners $ 2,089,436 $ 2,140,149
=========== ===========
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(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:
1996 1995
Partners' Capital for
Financial Reporting Purposes $17,249,399 $17,089,574
Adjusted Tax Basis of Investments
in Real Estate Under Net Investments
in Real Estate for Financial
Reporting Purposes (55,851) (95,029)
Capitalized Start-Up Costs
Under Section 195 272,259 396,917
Amortization of Start-Up and
Organization Costs (199,510) (265,344)
Income Accrued for Tax Purposes
Over Income for Financial
Reporting Purposes 94,352 33,708
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 45,281 0
Organization and Syndication Costs
Treated as Reduction of Capital
For Financial Reporting Purposes 3,018,278 3,018,278
----------- -----------
Partners' Capital for
Tax Reporting Purposes $20,424,208 $20,178,104
=========== ===========
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(9) Fair Value of Financial Instruments -
The estimated fair values of the financial instruments, none
of which are held for trading purposes, for the years ended
December 31:
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash $ 459 $ 459 $ 698 $ 698
Money Market Funds 2,477,324 2,477,324 1,716,860 1,716,860
Commerical Paper
(held to maturity) 0 0 1,989,796 1,989,796
Federal Agency Note
(held to maturity) 0 0 995,022 995,022
--------- --------- --------- ---------
Total Cash and
Cash Equivalents $2,477,783 $2,477,783 $4,702,376 $4,702,376
========= ========= ========= =========
Notes Receivable $2,169,968 $2,169,968 $1,548,825 $1,548,825
========= ========= ========= =========
The amortized cost basis of the commercial paper and federal
agency notes, is not materially different from its carrying
amount or fair value. The notes receivable carrying amounts
approximate fair value.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The registrant is a limited partnership and has no
officers, directors, or direct employees. The General Partners
of the registrant are Robert P. Johnson and AFM. The General
Partners manage and control the Partnership's affairs and have
general responsibility and the ultimate authority in all matters
affecting the Partnership's business. The director and officers
of AFM are as follows:
Robert P. Johnson, age 52, is Chief Executive Officer,
President and Director and has held these positions since the
formation of AFM in September, 1990, and has been elected to
continue in these positions until September, 1997. From 1970 to
the present, he had been employed exclusively in the investment
industry, specializing in tax-advantaged limited partnership
investments. In that capacity, he has been involved in the
development, analysis, marketing and management of public and
private investment programs investing in net lease properties as
well as public and private investment programs investing in
energy development. Since 1971, Mr. Johnson has been the
president, a director and a registered principal of AEI
Incorporated, which is registered with the Securities and
Exchange Commission as a securities broker-dealer, is a member of
the National Association of Securities Dealers, Inc. (NASD) and
is a member of the Security Investors Protection Corporation
(SIPC). Mr. Johnson has been president, a director and the
principal shareholder of AEI Fund Management, Inc., a real estate
management company founded by him, since 1978. Mr. Johnson is
currently a general partner or principal of the general partner
in fifteen other limited partnerships.
Mark E. Larson, age 44, is Executive Vice President,
Treasurer and Chief Financial Officer and has held these
positions since the formation of AFM in September, 1990, and has
been elected to continue in these positions until September,
1997. In January, 1993, Mr. Larson was elected to serve as
Secretary of AFM and will continue to serve until September,
1995. Mr. Larson has been employed by AEI Fund Management, Inc.
and affiliated entities since 1985. From 1979 to 1985, Mr.
Larson was with Apache Corporation as manager of Program
Accounting responsible for the accounting and reports for
approximately 46 public partnerships. Mr. Larson is responsible
for supervising the accounting functions of AFM and the
registrant.
ITEM 10. EXECUTIVE COMPENSATION.
The General Partner and affiliates are reimbursed at cost
for all services performed on behalf of the registrant and for
all third party expenses paid on behalf of the registrant. The
cost for services performed on behalf of the registrant is actual
time spent performing such services plus an overhead burden.
These services include organizing the registrant and arranging
for the offer and sale of Units, reviewing properties for
acquisition and rendering administrative and management services.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
AFM, the Managing General Partner of the registrant, and
Robert P. Johnson, its Individual General Partner, contributed
$1,000 in total for their interest in the registrant. See Item 1
for a discussion of their share of the registrant's profits and
losses. As of December 31, 1996, Mr. Johnson owned five Limited
Partnership Units (less than 1% of Units outstanding).
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The registrant, AFM and its affiliates have common
management and utilize the same facilities. As a result, certain
administrative expenses are allocated among these related
entities. All of such activities and any other transactions
involving the affiliates of the General Partner of the registrant
are governed by, and are conducted in conformity with, the
limitations set forth in the Limited Partnership Agreement of the
registrant.
The following table sets forth the forms of compensation,
distributions and cost reimbursements paid by the registrant to
the General Partners or their Affiliates in connection with the
operation of the Fund and its properties for the period from
inception through December 31, 1996.
Person or Entity Amount Incurred From
Receiving Form and Method Inception (September 14, 1990)
Compensation of Compensation To December 31, 1996
AEI Incorporated Selling Commissions equal to 7% of $2,115,193
proceeds plus a 3% nonaccountable
expense allowance, most of which was
reallowed to Participating Dealers.
General Partners Reimbursement at Cost for other $ 903,786
and Affiliates Organization and Offering Costs.
General Partners Reimbursement at Cost for all $ 527,142
and Affiliates Acquisition Expenses
General Partners 1% of Net Cash Flow in any fiscal $ 83,825
year until the Limited Partners have
received annual, non-cumulative
distributions of Net Cash Flow equal
to 10% of their Adjusted Capital
Contributions and 10% of any remaining
Net Cash Flow in such fiscal year.
General Partners Reimbursement at Cost for all $1,388,315
and Affiliates Administrative Expenses attributable
to the Fund, including all expenses
related to management and disposition
of the Fund's properties and all other
transfer agency, reporting, partner
relations and other administrative
functions.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (Continued)
Person or Entity Amount Incurred From
Receiving Form and Method Inception (September 14, 1990)
Compensation of Compensation To December 31, 1996
General Partners 1% of distributions of Net Proceeds of $ 7,067
Sale until Limited Partners have
received an amount equal to (a) their
Adjusted Capital Contributions, plus
(b) an amount equal to 12% of their
Adjusted Capital Contributions per
annum, cumulative but not compounded,
to the extent not previously distributed.
10% of distributions of Net Proceeds of
Sale there-after.
The limitations included in the Partnership Agreement
require that the cumulative reimbursements to the General
Partners and their affiliates for administrative expenses not
allowed under the NASAA Guidelines ("Guidelines") will not exceed
the sum of (i) the front-end fees allowed by the Guidelines less
the front-end fees paid, (ii) the cumulative property management
fees allowed but not paid, (iii) any real estate commission
allowed under the Guidelines, and (iv) 10% of Net Cash Flow less
the Net Cash Flow actually distributed. The reimbursements not
allowed under the Guidelines include a controlling person's
salary and fringe benefits, rent and depreciation. As of
December 31, 1996, the cumulative reimbursements to the General
Partners and their affiliates did not exceed these amounts.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 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 October 10, 1990
[File No. 33-37239]).
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 October 10, 1990
[File No. 33-37239]).
10.1 Net Lease Agreement dated
March 16, 1992 between the Partnership and
Taco Cabana, Inc. relating to the property
at 6040 Bandera Road, San Antonio, Texas
(incorporated by reference to Exhibit 10.1
of Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form
S-11 filed with the Commission on June 15,
1992 [File No. 33-37239]).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.2 Net Lease Agreement dated
July 31, 1991 between the Partnership and
Taco Cabana, Inc. relating to the property
at 700 North Loop West IH-610, Houston,
Texas (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 June
15, 1992 [File No. 33-37239]).
10.3 Net Lease Agreement dated
May 1, 1992 between the Partnership and
Taco Cabana, Inc. relating to the property
at 825 South 6th Street, Waco, Texas
(incorporated by reference to Exhibit 10.3
of Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form
S-11 filed with the Commission on June 15,
1992 [File No. 33-37239]).
10.4 Net Lease Agreement dated
August 13, 1992 between the Partnership and
Taco Cabana, Inc. relating to the property
at 111 North General Bruce Drive, Temple,
Texas (incorporated by reference to Exhibit
A of Form 8-K filed with the Commission on
August 27, 1992).
10.5 Net Lease Agreement dated
December 22, 1992 between the Partnership
and RCI West, Inc. relating to the property
at East Iliff Avenue and Blackhawk Street,
Aurora, Colorado (incorporated by reference
to Exhibit 10.6 of Form 10-K filed with the
Commission on March 29, 1993).
10.6 Co-Tenancy Agreement dated
December 30, 1992 between the Partnership
and Bruce R. Logan relating to the property
at East Iliff Avenue and Blackhawk Street,
Aurora, Colorado (incorporated by reference
to Exhibit 10.7 of Form 10-K filed with the
Commission on March 29, 1993).
10.7 Co-Tenancy Agreement dated
January 28, 1993 between the Partnership
and Frederick G. and Nicole A. Hamer
relating to the property at East Iliff
Avenue and Blackhawk Street, Aurora,
Colorado (incorporated by reference to
Exhibit 10.8 of Form 10-K filed with the
Commission on March 29, 1993).
10.8 Net Lease Agreement dated
February 16, 1993 between the Partnership
and Red Line Houston One, Ltd. relating to
the property at 11th & Shepard Road,
Houston, Texas (incorporated by reference
to Exhibit 10.9 of Form 10-K filed with the
Commission on March 29, 1993).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.9 Net Lease Agreement dated
February 16, 1993 between the Partnership
and Red Line Burgers, Inc. relating to the
property at 6665 Hillcroft Street, Houston,
Texas (incorporated by reference to Exhibit
10.10 of Form 10-K filed with the
Commission on March 29, 1993).
10.10 Purchase Agreement
dated April 1, 1993 between the Partnership
and Charles Kimball relating to the
property at 825 South 6th Street, Waco,
Texas (incorporated by reference to Exhibit
10.16 of Form 10-K filed with the
Commission on March 29, 1994).
10.11 Net Lease Agreement
dated April 2, 1993 between the Partnership
and Red Line Burgers, Inc. relating to the
property at 4989 Ayers Street, Corpus
Christi, Texas. (incorporated by reference
to Exhibit 10.17 of Form 10-K filed with
the Commission on March 29, 1994)
10.12 Net Lease Agreement
dated April 14, 1993 between the
Partnership and Apple Partners Limited
Partnership relating to the property at
9041-E Watson Road, Crestwood, Missouri
(incorporated by reference to Exhibit 10.18
of Form 10-K filed with the Commission on
March 29, 1994).
10.13 Co-Tenancy Agreement
dated April 29, 1993 between the
Partnership and Charles Kimball relating to
the property at 825 South 6th Street, Waco,
Texas (incorporated by reference to Exhibit
10.19 of Form 10-K filed with the
Commission on March 29, 1994).
10.14 Net Lease Agreement
dated June 15, 1993 between the Partnership
and Thomas and King, Inc. relating to the
property at Turkeyfoot at I-275, Crestview
Hills, Kentucky (incorporated by reference
to Exhibit 10.20 of Form 10-K filed with
the Commission on March 29, 1994).
10.15 Net Lease Agreement
dated June 16, 1993 between the Partnership
and JB's Restaurants, Inc. relating to the
property at 330 South Wilmot Road, Tucson,
Arizona (incorporated by reference to
Exhibit 10.21 of Form 10-K filed with the
Commission on March 29, 1994).
10.16 Net Lease Agreement
dated June 23, 1993 between the Partnership
and GC Covington, Inc. relating to the
property at Highway 190 and I-12,
Covington, Louisiana (incorporated by
reference to Exhibit 10.22 of Form 10-K
filed with the Commission on March 29,
1994).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.17 Net Lease Agreement
dated July 8, 1993 between the Partnership
and Red Line Burgers, Inc. relating to the
property at FM802, Brownsville, Texas
(incorporated by reference to Exhibit 10.23
of Form 10-K filed with the Commission on
March 29, 1994).
10.18 Net Lease Agreement
dated July 8, 1993 between the Partnership
and Red Line Burgers, Inc. relating to the
property at 1015 East University, Edinburg,
Texas (incorporated by reference to Exhibit
10.24 of Form 10-K filed with the
Commission on March 29, 1994).
10.19 Net Lease Agreement
dated September 30, 1993 between the
Partnership and Casual Restaurant Concepts
II, Inc. relating to the property at
Terrace Walk Shopping Plaza, 56th Street
and Fowler Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.28
of Form 10-K filed with the Commission on
March 29, 1994).
10.20 Purchase Agreement
dated October 21, 1993 between the
Partnership and the Lee Revocable Trust
relating to the property at Terrace Walk
Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.30
of Form 10-K filed with the Commission on
March 29, 1994).
10.21 Net Lease Agreement
dated December 2, 1993 between the
Partnership and Apple Partners Limited
Partnership relating to the property at
1220 N.W. 185th Avenue, Beaverton, Oregon
(incorporated by reference to Exhibit 10.31
of Form 10-K filed with the Commission on
March 29, 1994).
10.22 Co-Tenancy Agreement
dated January 11, 1994 between the
Partnership and the Lee Revocable Trust
relating to the property at Terrace Walk
Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.32
of Form 10-K filed with the Commission on
March 29, 1994).
10.23 Purchase Agreement
dated March 11, 1994 between the
Partnership and Robert E. Miller relating
to the property at 5779 East Fowler Avenue,
Temple Terrace, Florida (incorporated by
reference to Exhibit 10.28 of Form 10-KSB
filed with the Commission on March 30,
1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.24 Purchase Agreement
dated March 24, 1994 between the
Partnership and Bruce R. Logan relating to
the property at East Iliff Avenue and
Blackhawk Street, Aurora, Colorado
(incorporated by reference to Exhibit 10.29
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.25 Co-Tenancy Agreement
dated March 31, 1994 between the
Partnership and Robert E. Miller relating
to the property at 5779 East Fowler Avenue,
Temple Terrace, Florida (incorporated by
reference to Exhibit 10.30 of Form 10-KSB
filed with the Commission on March 30,
1995).
10.26 Amendment to Co-Tenancy
Agreement dated April 8, 1994 between the
Partnership and Bruce R. Logan relating to
the property at East Iliff Avenue and
Blackhawk Street, Aurora, Colorado
(incorporated by reference to Exhibit 10.31
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.27 Promissory Note dated
April 28, 1994 between the Partnership and
Apple Investment Group, Inc. relating to
the property at Bear Valley Road and Apple
Valley Road, Apple Valley, California
(incorporated by reference to Exhibit 10.32
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.28 Net Lease Agreement
dated April 28, 1994 between the
Partnership and Apple Investment Group,
Inc. relating to the property at Bear
Valley Road and Apple Valley Road, Apple
Valley, California (incorporated by
reference to Exhibit 10.33 of Form 10-KSB
filed with the Commission on March 30,
1995).
10.29 Purchase Agreement
dated April 29, 1994 between the
Partnership and the Tilson Trust relating
to the property at 30 Crestview Hills Mall
Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.34
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.30 Net Lease Agreement
dated May 19, 1994 between the Partnership,
AEI Fund Management XIX, Inc., and Mark E.
Larson, jointly and severally, and
SportsTown, Inc. relating to the property
at 1305 Bridford Parkway, Greensboro, North
Carolina (incorporated by reference to
Exhibit 10.35 of Form 10-KSB filed with the
Commission on March 30, 1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.31 Co-Tenancy Agreement
dated May 25, 1994 between the Partnership
and the Tilson Trust relating to the
property at 30 Crestview Hills Mall Road,
Crestview Hills, Kentucky (incorporated by
reference to Exhibit 10.36 of Form 10-KSB
filed with the Commission on March 30,
1995).
10.32 Purchase Agreement
dated June 3, 1994 between the Partnership
and Bruce R. Logan relating to the property
at 825 South 6th Street, Waco, Texas
(incorporated by reference to Exhibit 10.37
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.33 Purchase Agreement
dated June 17, 1994 between the Partnership
and Richard Bagot relating to the property
at 825 South 6th Street, Waco, Texas
(incorporated by reference to Exhibit 10.38
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.34 Purchase Agreement
dated June 17, 1994 between the Partnership
and Richard Bagot relating to the property
at 30 Crestview Hills Mall Road, Crestview
Hills, Kentucky (incorporated by reference
to Exhibit 10.39 of Form 10-KSB filed with
the Commission on March 30, 1995).
10.35 Co-Tenancy Agreement
dated June 27, 1994 between the Partnership
and Bruce R. Logan relating to the property
at 825 South 6th Street, Waco, Texas
(incorporated by reference to Exhibit 10.40
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.36 Agreement of Exchange
dated June 30, 1994 between the Partnership
and Texas Taco Cabana, L.P. relating to the
properties at 111 North General Bruce
Drive, Temple, Texas and 2101 S. IH-35,
Round Rock, Texas (incorporated by
reference to Exhibit 10.41 of Form 10-KSB
filed with the Commission on March 30,
1995).
10.37 Amendment to Net Lease
Agreement dated June 30, 1994 between the
Partnership and Texas Taco Cabana, L.P.
relating to the properties at 111 North
General Bruce Drive, Temple, Texas and 2101
S. IH-35, Round Rock, Texas (incorporated
by reference to Exhibit 10.42 of Form 10-
KSB filed with the Commission on March 30,
1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.38 Co-Tenancy Agreement
dated July 7, 1994 between the Partnership
and Richard Bagot relating to the property
at 825 South 6th Street, Waco, Texas
(incorporated by reference to Exhibit 10.43
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.39 Co-Tenancy Agreement
dated July 15, 1994 between the Partnership
and Richard Bagot relating to the property
at 30 Crestview Hills Mall Road, Crestview
Hills, Kentucky (incorporated by reference
to Exhibit 10.44 of Form 10-KSB filed with
the Commission on March 30, 1995).
10.40 Net Lease Agreement
dated August 3, 1994 between the
Partnership and Florida Restaurant Group,
Inc. relating to the property at 2080 S.
University Drive, Davie, Florida
(incorporated by reference to Exhibit 10.45
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.41 Purchase Agreement
dated August 22, 1994 between the
Partnership and The Potloff Living Trust
relating to the property at 30 Crestview
Hills Mall Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.46
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.42 Purchase Agreement
dated September 6, 1994 between the
Partnership and Patricia J. Grant relating
to the property at East Iliff Avenue and
Blackhawk Street, Aurora, Colorado
(incorporated by reference to Exhibit 10.47
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.43 Co-Tenancy Agreement
dated September 9, 1994 between the
Partnership and Patricia J. Grant relating
to the property at East Iliff Avenue and
Blackhawk Street, Aurora, Colorado
(incorporated by reference to Exhibit 10.48
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.44 Co-Tenancy Agreement
dated September 9, 1994 between the
Partnership and The Potloff Living Trust
relating to the property at 30 Crestview
Hills Mall Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.49
of Form 10-KSB filed with the Commission on
March 30, 1995).
10.45 Purchase Agreement
dated November 30, 1994 between the
Partnership, AEI Fund Management XIX, Inc.,
and Mark E. Larson and 381 Sunrise
Associates relating to the property at 1305
Bridford Parkway, Greensboro, North
Carolina (incorporated by reference to
Exhibit 10.50 of Form 10-KSB filed with the
Commission on March 30, 1995).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.46 Purchase Agreement
dated December 20, 1994 between the
Partnership and the William W. and Jean E.
Herich Family Trust relating to the
property at 825 South 6th Street, Waco,
Texas (incorporated by reference to Exhibit
10.51 of Form 10-KSB filed with the
Commission on March 30, 1995).
10.47 Co-Tenancy Agreement
dated January 12, 1994 between the
Partnership and the William W. and Jean E.
Herich Family Trust relating to the
property at 825 South 6th Street, Waco,
Texas (incorporated by reference to Exhibit
10.52 of Form 10-KSB filed with the
Commission on March 30, 1995).
10.48 Purchase Agreement
dated March 7, 1995 between the Partnership
and The William W. and Jean E. Herich
Family Trust relating to the property at
East Iliff Avenue and Blackhawk Street,
Aurora, Colorado (incorporated by reference
to Exhibit 10.48 of Form 10-KSB filed with
the Commission on March 21, 1996).
10.49 Property Co-Tenancy
Ownership Agreement dated March 31, 1995
between the Partnership and The William W.
and Jean E. Herich Family Trust relating to
the property at East Iliff Avenue and
Blackhawk Street, Aurora, Colorado
(incorporated by reference to Exhibit 10.49
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.50 Amendment to Purchase
Agreement dated April 5, 1995 between the
Partnership, AEI Fund Management XIX, Inc.,
Mark E. Larson and 381 Sunrise Associates
relating to the property at 1305 Bridford
Parkway, Greensboro, North Carolina
(incorporated by reference to Exhibit 10.50
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.51 Purchase Agreement
dated June 2, 1995 between the Partnership
and Scott L. Skogman relating to the
property at East Iliff Avenue and Blackhawk
Street, Aurora, Colorado (incorporated by
reference to Exhibit 10.51 of Form 10-KSB
filed with the Commission on March 21,
1996).
10.52 Purchase Agreement
dated June 2, 1995 between the Partnership
and Scott L. Skogman relating to the
property at 825 South 6th Street, Waco,
Texas (incorporated by reference to Exhibit
10.52 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.53 Purchase Agreement
dated June 2, 1995 between the Partnership
and Frank P. Scalzo relating to the
property at East Iliff Avenue and Blackhawk
Street, Aurora, Colorado (incorporated by
reference to Exhibit 10.53 of Form 10-KSB
filed with the Commission on March 21,
1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.54 Property Co-Tenancy
Ownership Agreement dated June 15, 1995
between the Partnership and Scott L.
Skogman relating to the property at East
Iliff Avenue and Blackhawk Street, Aurora,
Colorado (incorporated by reference to
Exhibit 10.54 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.55 Property Co-Tenancy
Ownership Agreement dated June 16, 1995
between the Partnership and Scott L.
Skogman relating to the property at 825
South 6th Street, Waco, Texas (incorporated
by reference to Exhibit 10.55 of Form
10-KSB filed with the Commission on March
21, 1996).
10.56 Property Co-Tenancy
Ownership Agreement dated June 16, 1995
between the Partnership and Frank P. Scalzo
relating to the property at East Iliff
Avenue and Blackhawk Street, Aurora,
Colorado (incorporated by reference to
Exhibit 10.56 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.57 Purchase Agreement
dated July 11, 1995 between the Partnership
and Menzel Polzin Partners relating to the
property at 30 Crestview Hills Mall Road,
Crestview Hills, Kentucky (incorporated by
reference to Exhibit 10.57 of Form 10-KSB
filed with the Commission on March 21,
1996).
10.58 Property Co-Tenancy
Ownership Agreement dated July 14, 1995
between the Partnership and Menzel Polzin
Partners relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.58 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.59 Real Estate Contract,
Promissory Note and Purchase Money Mortgage
and Security Agreement and Fixture
Financing Statement dated July 26, 1995
between the Partnership and Jackson-Shaw
Partners No. 51, Ltd. relating to the
property at 2080 South University Drive,
Davie, Florida (incorporated by reference
to Exhibit 10.59 of Form 10-KSB filed with
the Commission on March 21, 1996).
10.60 Purchase Agreement
dated September 19, 1995 between the
Partnership and Patricia S. Marshall
relating to the property at Terrace Walk
Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.60
of Form 10-KSB filed with the Commission on
March 21, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.61 Property Co-Tenancy
Ownership Agreement dated September 28,
1995 between the Partnership and Patricia
S. Marshall relating to the property at
Terrace Walk Shopping Plaza, 56th Street
and Fowler Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.61
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.62 Purchase and
Sale/Leaseback Agreement dated November 16,
1995 between the Partnership, AEI Net Lease
Income & Growth Fund XX Limited
Partnership, AEI Income & Growth Fund XXI
Limited Partnership and The Musicland Group
relating to the property at 7370-153rd
Street West, Apple Valley, Minnesota
(incorporated by reference to Exhibit 10.62
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.63 Purchase Agreement
dated November 27, 1995 between the
Partnership and The Nicoletta Trust
relating to the property at 30 Crestview
Hills Mall Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.63
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.64 Purchase Agreement
dated December 2, 1995 between the
Partnership and The Joan Koller Trust
relating to the property at Terrace Walk
Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.64
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.65 Purchase Agreement
dated December 2, 1995 between the
Partnership and The Joan Koller Trust
relating to the property at 30 Crestview
Hills Mall Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.65
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.66 Property Co-Tenancy
Ownership Agreement dated December 7, 1995
between the Partnership and The Joan Koller
Trust relating to the property at Terrace
Walk Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.66
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.67 Property Co-Tenancy
Ownership Agreement dated December 8, 1995
between the Partnership and The Joan Koller
Trust relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.67 of Form 10-KSB filed with the
Commission on March 21, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.68 Property Co-Tenancy
Ownership Agreement dated December 8, 1995
between the Partnership and The Nicoletta
Trust relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.68 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.69 Lease Agreement dated
December 21, 1995 between the Partnership,
AEI Net Lease Income & Growth Fund XX
Limited Partnership, AEI Income & Growth
Fund XXI Limited Partnership and The
Musicland Group relating to the property at
7370-153rd Street West, Apple Valley,
Minnesota (incorporated by reference to
Exhibit 10.69 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.70 Purchase and Sale
Agreement dated January 10, 1996 between
the Partnership, AEI Net Lease Income &
Growth Fund XX Limited Partnership, AEI
Income & Growth Fund XXI Limited
Partnership and TKC X, LLC relating to the
property at 11415 Carolina Place Parkway,
Pineville, North Carolina (incorporated by
reference to Exhibit 10.70 of Form 10-KSB
filed with the Commission on March 21,
1996).
10.71 Net Lease Agreement
dated August 2, 1995, between TKC X, LLC
and Garden Ridge, Inc. relating to the
property at 11415 Carolina Place Parkway,
Pineville, North Carolina (incorporated by
reference to Exhibit 10.1 of Form 8-K filed
with the Commission on April 10, 1996).
10.72 Purchase and Sale
Agreement dated January 10, 1996 between
the Partnership, AEI Income & Growth Fund
XXI Limited Partnership, AEI Net Lease
Income & Growth Fund XX Limited
Partnership, and TKC X, LLC relating to the
Garden Ridge store in Pineville, North
Carolina (incorporated by reference to
Exhibit 10.2 of Form 8-K filed with the
Commission on April 10, 1996).
10.73 First Amendment to
Lease Agreement dated March 1, 1996 between
TKC X, LLC and Garden Ridge, L.P. relating
to the property at 11415 Carolina Place
Parkway, Pineville, North Carolina
(incorporated by reference to Exhibit 10.3
of Form 8-K filed with the Commission on
April 10, 1996).
10.74 Assignment and
Assumption of Lease dated March 28, 1996
between the Partnership, AEI Income &
Growth Fund XXI Limited Partnership, AEI
Net Lease Income & Growth Fund XX Limited
Partnership, and TKC X, LLC relating to the
property at 11415 Carolina Place Parkway,
Pineville, North Carolina (incorporated by
reference to Exhibit 10.4 of Form 8-K filed
with the Commission on April 10, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.75 Purchase Agreement
dated April 4, 1996 between the
Partnership, Larry Z. White and Mary J.
White relating to the property at 330 South
Wilmot Road, Tucson, Arizona (incorporated
by reference to Exhibit 10.1 of Form 10-QSB
filed with the Commission on May 13, 1996).
10.76 Property Co-Tenancy
Ownership Agreement dated April 5, 1996
between the Partnership, Larry Z. White and
Mary J. White relating to the property at
330 South Wilmot Road, Tucson, Arizona
(incorporated by reference to Exhibit 10.2
of Form 10-QSB filed with the Commission on
May 13, 1996).
10.77 Purchase Agreement
dated April 19, 1996 between the
Partnership and the Gummersheimer Living
Trust relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.3 of Form 10-QSB filed with the
Commission on May 13, 1996).
10.78 Property Co-Tenancy
Ownership Agreement dated April 26, 1996
between the Partnership and the
Gummersheimer Living Trust relating to the
property at 30 Crestview Hills Mall Road,
Crestview Hills, Kentucky (incorporated by
reference to Exhibit 10.4 of Form 10-QSB
filed with the Commission on May 13, 1996).
10.79 Purchase Agreement
dated April 18, 1996 between the
Partnership and Marshall Kilduff relating
to the property at 30 Crestview Hills Mall
Road, Crestview Hills, Kentucky
(incorporated by reference to Exhibit 10.1
of Form 10-QSB filed with the Commission on
August 12, 1996).
10.80 Property Co-Tenancy
Ownership Agreement dated May 15, 1996
between the Partnership and Marshall
Kilduff relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.2 of Form 10-QSB filed with the
Commission on August 12, 1996).
10.81 Purchase Agreement
dated May 28, 1996 between the Partnership
and Janet Y. Thompson relating to the
property at Terrace Walk Shopping Plaza,
56th Street and Fowler Avenue, Temple
Terrace, Florida (incorporated by reference
to Exhibit 10.3 of Form 10-QSB filed with
the Commission on August 12, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.82 Property Co-Tenancy
Ownership Agreement dated June 7, 1996
between the Partnership and Janet Y.
Thompson relating to the property at
Terrace Walk Shopping Plaza, 56th Street
and Fowler Avenue, Temple Terrace, Florida
(incorporated by reference to Exhibit 10.4
of Form 10-QSB filed with the Commission on
August 12, 1996).
10.83 Purchase Agreement
dated October 8, 1996 between the
Partnership and the Mark A. Benson Living
Trust relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.1 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.84 Property Co-Tenancy
Ownership Agreement dated October 17, 1996
between the Partnership and Mark A. Benson
Living Trust relating to the property at 30
Crestview Hills Mall Road, Crestview Hills,
Kentucky (incorporated by reference to
Exhibit 10.2 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.85 Purchase Agreement
dated July 16, 1996 between the Partnership
and Tom Bibleheimer relating to the
property at 2101 S. IH-35, Round Rock,
Texas (incorporated by reference to Exhibit
10.5 of Form 10-QSB filed with the
Commission on August 12, 1996).
10.86 Promissory Note dated
November 6, 1996 between the Partnership,
John Schulz and Tom Bibleheimer relating to
the property at 2101 S. IH-35, Round Rock,
Texas (incorporated by reference to Exhibit
10.3 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.87 Assignment and
Assumption of Lease dated November 6, 1996
between the Partnership, John Schulz and
Tom Bibleheimer relating to the property at
2101 S. IH-35, Round Rock, Texas
(incorporated by reference to Exhibit 10.4
of Form 10-QSB filed with the Commission on
November 14, 1996).
10.88 Deed of Trust and
Security Agreement and Fixture Financing
Statement and Assignment of Rent and Leases
dated November 6, 1996 between the
Partnership, John Schulz and Tom
Bibleheimer relating to the property at
2101 S. IH-35, Round Rock, Texas
(incorporated by reference to Exhibit 10.5
of Form 10-QSB filed with the Commission on
November 14, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits - (Continued)
Description
10.89 Subordination Non-
Disturbance and Attornment Agreement dated
November 6, 1996 between the Partnership,
John Schulz and Tom Bibleheimer relating to
the property at 2101 S. IH-35, Round Rock,
Texas (incorporated by reference to Exhibit
10.6 of Form 10-QSB filed with the
Commission on November 14, 1996).
10.90 Purchase Agreement
dated November 6, 1996 between the
Partnership and Teresa E. and William H.
Balster relating to the property at Terrace
Walk Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida.
10.91 Property Co-Tenancy
Agreement dated November 15, 1996 between
the Partnership and Teresa E. and William
H. Balster relating to the property at
Terrace Walk Shopping Plaza, 56th Street
and Fowler Avenue, Temple Terrace, Florida.
10.92 Purchase Agreement
dated December 26, 1996 between the
Partnership and William E. Mason and Hazel
mason relating to the property at Terrace
Walk Shopping Plaza, 56th Street and Fowler
Avenue, Temple Terrace, Florida.
10.93 Property Co-Tenancy
Ownership Agreement dated January 2, 1997
between the Partnership and William E.
Mason and Hazel Mason relating to the
property at Terrace Walk Shopping Plaza,
56th Street and Fowler Avenue, Temple
Terrace, Florida.
27 Financial Data Schedule for
period ended December 31, 1996.
B. Reports on Form 8-K and 8-
K/A During the quarter ended
December 31, 1996, the
Partnership filed a Form 8-K,
dated November 19, 1996
reporting the sale of the Taco
Cabana restaurant in Round
Rock, Texas.
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 NET LEASE INCOME & GROWTH FUND XIX
Limited Partnership
By: AEI Fund Management XIX, Inc.
Its Managing General Partner
March 26, 1997 By: /s/ Robert P. Johnson
Robert P. Johnson, President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert P.Johnson President (Principal Executive Officer) March 26, 1997
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E. Larson Executive Vice President, Treasurer March 26, 1997
Mark E. Larson and Chief Financial Officer
(Principal Accounting Officer)
PURCHASE AGREEMENT
Applebee's - Temple Terrace, FL
This AGREEMENT, entered into effective as of the 06 of November,
1996 .
l. Parties. Seller is AEI Net Lease Income & Growth Fund XIX
Limited Partnership ("Seller"), Seller presently holds an
undivided 35.0649% interest in the fee title to that certain real
property legally described in the attached Exhibit "A". (the
"Entire Property") Buyer is Teresa E. and William H. Balster,
married with rights of survivorship ("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 14.4270 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Property is $250,000, all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed.
(b) Buyer will deposit the balance of the purchase price,
$245,000 (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 November 15,
1996.
6 . Due Diligence. Buyer will have until the expiration of the
fifth business day after delivery of each of following items, to
be supplied by Seller, to conduct all of its inspections and due
diligence and satisfy itself regarding each item, the Property,
and this transaction.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) copies of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
any review period or inspection period. Such notice shall be
deemed effective only upon receipt by Seller.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Buyer irrevocably will be deemed to have canceled this
Agreement and relinquish all rights in and to the Property unless
Buyer makes the Second Payment when required. If this Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this agreement by both parties.. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; and other items of record
disclosed to Buyer during the contingency period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
requested by Seller to evidence the termination hereof) Buyer's
First Payment shall be returned and this Agreement shall be null
and void and of no further force and effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay the deed stamp taxes and
one-half of escrow fees, and any brokerage commissions payable.
Seller shall pay for the cost of issuing the title commitment.
Buyer will pay all recording fees, one-half of the escrow fees,
the costs of an update to the Survey in Seller's possession (if
an update is required by Buyer) and the title insurance premium
for an Owner's policy if Buyer wishes to purchase one. Each party
will pay its own attorneys' fees and costs to document and close
this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and therafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between Seller and
Restaurant Concepts II, Inc. dated October 1, 1993, Seller
is not aware of any leases of the Property. The above
referenced lease agreement has an option to purchase in
favor of the Tenant as set forth in article 34 of said lease
agreement.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (c) 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 withheld.
However, Buyer acknowledges that Seller retains the right
both prior to and after the Closing Date to freely transfer
all or a portion of Seller's remaining undivided interest in
the Entire Property provided such sale shall not encumber
the Property being purchased by Buyer in violation of the
terms hereof or the contemplated Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent Buyer from using and operating the Property after
the Closing in the manner in which the Property has been
used and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date.
(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.
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Lessee and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no Warranty or representation, Express or Implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
13. Closing.
(a) Before the closing date, Seller will deposit into
escrow an executed warranty deed conveying insurable title
of the Property to Buyer.
(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. 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
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
performance, purchase the Property and close escrow as per this
Agreement, regardless of any alleged default or misconduct by
Seller. Provided, however, that in no event shall Seller be
liable for any actual, punitive, consequential or speculative
damages arising out of any default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any five-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
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 aMarshall
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to Guarantee Escrow of
Minnesota who will act as Facilitator to perfect the 1031
exchange by preparing an agreement of exchange of Real Property
whereby Guarantee Escrow of Minnesota will be an independent
third party purchasing the ownership interest in subject property
from Seller and selling the ownership interest in subject
property to Buyer under the same terms and conditions as
documented in this Purchase Agreement. Buyer asks the Seller to
cooperate in the perfection of such an exchange at no additional
cost or expense or delay in time. Buyer hereby indemnifies and
holds Seller harmless from any claims and/or actions resulting
from said exchange. Pursuant to the direction of Guarantee
Escrow of Minnesota, Seller will deed the property to Buyer.
18. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
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 November 15, 1996
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Net Lease Income & Growth Fund XIX Limited
Partnership
1300 Minnesota World Trade Center, 30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Teresa and William Balster
7690 W. Fish Lake Road
Maple Grove, MN 55311
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller along with the $5,000 First Payment,
which, if accepted, will be deposited in to escrow by Seller.
Seller has five (5) business days from receipt within which to
accept this offer.
Buyer Initial: /s/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: William H. and Teresa E. Balster
By: /s/ William H Balster
William H. Balster
By:/s/ Teresa E Balster
Teresa E. Balster
SELLER: 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/ WHB /s/ TEB
Purchase Agreement for Applebee's - Temple Terrace, FL
Exhibit A
Lot 1, of Terrace Walk, according to map or plat thereof as
recorded in Plat Book 70, Pages 33-1 and 33-2, of the Public
Records of Hillsborough County, Florida.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Applebee's - Temple Terrace, FL)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 15th day of Nov, 1996, by and
between Teresa E. and William H. Balster (hereinafter called
"Balster"), and AEI Net Lease Income & Growth Fund XIX Limited
Partnership (hereinafter called "Fund XIX") (Balster, Fund XIX
(and any other Owner in Fee where the context so indicates) being
hereinafter sometimes collectively called "Co-Tenants" and
referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XIX presently owns an undivided 20.6379% interest
in and to and Balster presently owns an undivided 14.4270%
interest in and to and Janet Thompson presently owns an undivided
5.7170% (also referred to herein as "Co-Tenant") interest in and
to and The Joan Koller Trust presently owns an undivided 11.9455%
(also referred to herein as "Co-Tenant") interest in and to, and
Patricia S. Marshall presently owns an undivided 15.4545% (also
referred to herein as "Co-Tenant")interest in and to and the Lee
Revocable Trust presently owns an undivided 16.3636% (also
referred to herein as "Co-Tenant") in and to and Robert E. Miller
presently owns an undivided 15.4545% (also referred to herein as
"Co-Tenant") in and to the land, situated in the City of Temple
Terrace, County of Hillsborough, and State of Florida, (legally
described upon Exhibit A attached hereto and hereby made a part
hereof) and in and to the improvements located thereon
(hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Balster's interest
by Fund XIX; the continued leasing of space within the Premises;
for the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Balster of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XIX, or its designated agent, successors or
assigns. Provided, however, if Fund XIX shall sell all of its
interest in the Premises, the duties and obligations of Fund XIX
respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XIX with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XIX as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of all present or future Co-
Tenants. Only Fund XIX may obligate any Co-Tenant with respect to
any expense for the Premises.
Co-Tenant Initial: /s/ WHB /s/ TEB
Co-Tenancy Agreement for Applebee's - Temple Terrace, FL
As further set forth in paragraph 2 hereof, Fund XIX agrees to
require any lessee of the Premises to name Balster as an insured
or additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XIX shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from lessee within 30 days of commencement of this
agreement. In any event, Fund XIX shall distribute any insurance
proceeds it may receive, to the extent consistent with any lease
on the Premises, to the Co-Tenants in proportion to their
respective ownership of the Premises.
2. Income, expenses and any net proceeds from a sale of the
Premises shall be allocated among the Co-Tenants in proportion to
their respective share(s) of ownership. Shares of net income
shall be pro-rated for any partial calendar years included within
the term of this Agreement. Fund XIX may offset against, pay to
itself and deduct from any payment due to Balster under this
Agreement, and may pay to itself the amount of Balster's share of
any legitimate expenses of the Premises which are not paid by
Balster to Fund XIX or its assigns, within ten (10) days after
demand by Fund XIX. In the event there is insufficient operating
income from which to deduct Balster's unpaid share of operating
expenses, Fund XIX may pursue any and all legal remedies for
collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Lessee under terms of any triple net lease agreement initiated
concurrently with, or subsequent to, this agreement.
Balster has elected to retain, and agrees to annually reimburse,
Fund XIX in the amount of $700 for the expenses, direct and
indirect, incurred by Fund XIX in providing quarterly accounting
and distributions of Balster's share of net income and for
tracking, reporting and assessing the calculation of Balster's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Balster
authorizes Fund XIX to deduct such amount from Balster's share of
revenue. Balster may terminate this agreement at any time and
collect it's share of rental stream directly from the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XIX's principal office, and each Co-Tenant shall have access
to such books and may inspect and copy any part thereof during
normal business hours. Within ninety (90) days after the end of
each calendar year during the term hereof, Fund XIX shall prepare
an accurate income statement for the ownership of the Premises
for said calendar year and shall furnish copies of the same to
all Co-Tenants. Quarterly, as its share, Balster shall be
entitled to receive 14.4270% of all items of income and expense
generated by the Premises, and Fund XIX shall be entitled to
receive 20.6379% as its share. Upon receipt of said accounting,
if the payments received by each Co-Tenant pursuant to this
Paragraph 3 do not equal, in the aggregate, the amounts which
each are entitled to receive with respect to said calendar year
pursuant to Paragraph 2 hereof, an appropriate adjustment shall
be made so that each Co-Tenant receives the amount to which it is
entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XIX, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XIX sufficient to pay said net operating losses
and to provide necessary
Co-Tenant Initial: /s/ WHB /s/ TEB
Co-Tenancy Agreement for Applebee's - Temple Terrace, FL
operating capital for the premises and to pay for said capital
improvements, repairs and/or replacements, all in proportion to
their undivided interests in and to the Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-Tenants reserve the right
to escrow proceeds from a sale of their interests in the Premises
to obtain tax deferral by the purchase of replacement property.
6. If any Co-Tenant (including Co-Tenant Lee Revocable Trust
which owns an undivided 16.3636 percent interest in the Premises,
subject to a Co-Tenancy Agreement with Fund XIX dated January 11,
1994, and including Co-Tenant Robert E. Miller which owns an
undivided 15.4545% interest in the Premises, subject to a Co-
Tenancy Agreement with Fund XIX dated March 31, 1994, and
including Co-Tenant Patricia S. Marshall which owns an undivided
15.4545% interest in the Premises, subject to a Co-Tenancy
Agreement with Fund XIX dated September 28, 1995 and including Co-
Tenant the Joan Koller Trust which presently owns an undivided
11.9455% interest in the Premises, subject to a Co-Tenancy
Agreement with Fund XIX dated December 7, 1995 and including Co-
Tenant Janet Thompson who owns an undivided 5.7170% interest in
the Premises, subject to a Co-Tenancy agreement with Fund XIX
dated June 7, 1996) shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This property management agreement shall continue in full
force and effect and shall bind and inure to the benefit of the
Co-Tenant and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns until
the expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises in accordance with the terms
hereof and proper disbursement of the proceeds thereof, whichever
shall first occur. Unless specifically identified as a personal
contract right or obligation herein, this agreement shall run
with any interest in the Premises and with the title thereto.
Once any person, party or entity has ceased to have an interest
in fee in the Premises, it shall not be bound by, subject to or
benefit from the terms hereof; but its heirs, executors,
administrators, personal representatives, successors or assigns,
as the case may be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XIX:
AEI Net Lease Income & Growth Fund XIX Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Balster:
Teresa and William Balster
7690 W. Fish Lake Road
Maple Grove, MN 55311
Co-Tenant Initial: /s/ WHB /s/ TEB
Co-Tenancy Agreement for Applebee's - Temple Terrace, FL
If to Thompson:
Janet Thompson
27598 Linwood Circle N.
Olmsted, OH 44070
If to the Joan Koller Trust:
Joan Koller
16001 Ballantine Lane
Huntington Beach, CA 92647
If to Patricia Marshall:
Patricia Marshall
1141 Randolph Road
McLean, VA 22101
If to Lee Revocable Trust:
Dale V. or Alice N. Lee
10831 E. Bellflower Drive
Sun Lakes, AZ 85248-9241
If to Robert E. Miller:
Robert E. Miller
1402 Sail Harbor Circle
Tarpon Springs, FL 34689
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. Fund XIX may offset against, pay to itself and deduct from
any payment due to Balster under this Agreement, and may pay to
itself the amount of Balster's share of any legitimate expenses
of the Premises which are not paid by Balster to Fund XIX or its
assigns, within ten (10) days after demand by Fund XIX. In the
event there is insufficient operating income from which to
Co-Tenant Initial: /s/ WHB /s/ TEB
Co-Tenancy Agreement for Applebee's - Temple Terrace, FL
deduct Balster's unpaid share of operating expenses, Fund XIX may
pursue any and all legal remedies for collection.
12. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Balster William H. and Teresa E. Balster
By: /s/ William H Balster
William H. Balster
By: /s/ Teresa E Balster
Teresa E. Balster
Witness By: /s/ Ana R Ramirez
STATE OF ) [notary seal]
/s/ Rachel M. Helgeson
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 12th day of November,1996, by Rachel M Helgeson,
Notary Public.
Fund XIX AEI Net Lease Income & Growth Fund XIX Limited Partnership
By: AEI Fund Management XIX, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Witness By: /s/ Barbara Kochevar
Witness By: /s/ Laura M Steidl
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 18th day of
November, 1996, Robert P. Johnson, President of AEI Fund
Management XIX, Inc., corporate general partner of AEI Net Lease
Income & Growth Fund XIX Limited Partnership, who executed the
foregoing instrument in said capacity and on behalf of the
corporation in its capacity as corporate general partner, on
behalf of said limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ WHB /s/ TEB
Co-Tenancy Agreement for Applebee's - Temple Terrace, FL
Exhibit A
Lot 1, of Terrace Walk, according to map or Plat thereof as
recorded in Plat Book 70, Pages 33-1 and 33-2, of the Public
Records of Hillsborough County, Florida
PURCHASE AGREEMENT
Applebee's Restaurant - Temple Terrace, FL
This AGREEMENT, entered into effective as of the 26 of Dec, 1996.
l. Parties. Seller is AEI Net Lease Income & Growth Fund XIX
Limited Partnership which owns an undivided 20.6379% interest in
the fee title to that certain real property legally described in
the attached Exhibit "A" (the "Entire Property") Buyer is
William E. Mason and Hazel Mason as tenants in common ("Buyer").
Seller wishes to sell and Buyer wishes to buy a portion as Tenant
in Common of Seller's interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 11.5416 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Property is $200,000, all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed, or otherwise disbursed
pursuant to the terms of this Agreement.
(b) Buyer will deposit the balance of the purchase price,
$195,000 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5. Closing Date. Escrow shall close on or before January 2,
1997.
6. Due Diligence. Buyer will have until the expiration of the
fifth business day (The "Review Period") after delivery of each
of following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Leased Premises or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) originals of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
the Review Period. Such notice shall be deemed effective only
upon receipt by Seller. If this Agreement is not cancelled as
set forth above, the First Payment shall be non-refundable unless
Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this Agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to have canceled this Agreement and
relinquish all rights in and to the Property unless Buyer makes
the Second Payment when required. If this Agreement is not
canceled and the Second Payment is made when required, all of
Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this Agreement by both parties.. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the Lease defined in paragraph 11 below,
and other items of record disclosed to Buyer during the
contingency period. Buyer's interest is subject to rights of
first refusal and other rights of Co-Tenants and terms and
conditions recited in the unrecorded Co-Tenancy Agreement
referred to in those certain instruments recorded in Official
Records Book 7253, page 672; Official Records Book 7341, page
1266; Official Records Book 7903, page 1116; Official Records
Book 7978, page 364; Official Records Book 8176, page 934; and
Official Records Book 8353, page 835, all of public records of
Hillsborough County, Florida.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable except those brokerage commissions incurred by Buyer.
The Buyer will pay the cost of issuing a standard Owners Title
Insurance Policy in the full amount of the purchase price, if
Buyer shall decide to purchase the same. Buyer will pay all
recording fees, one-half of the escrow fees, and the cost of an
update to the Survey in Sellers possession (if an update is
required by Buyer.) Each party will pay its own attorney's fees
and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and thereafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between AEI Net Lease
Income & Growth Fund XIX Limited Partnership and Casual
Restaurant Concepts II, Inc., "Tenant"), dated September 30,
1993 Seller is not aware of any leases of the Property.
The above referenced lease agreement has an option to
purchase in favor of the Tenant as set forth in article 34
of said lease agreement. While the above referenced Lease
Agreement contains reference to Credit Enhancement paid by
Lessee, no portion of such Credit Enhancement shall accrue
to the benefit of Buyer.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts prior to the closing Date that would materially
affect the Property and be binding on Buyer after the
closing date without Buyer's prior consent, which will not
be unreasonably withheld. However, Buyer acknowledges that
Seller retains the right both prior to and after the Closing
Date to freely transfer all or a portion of Seller's
remaining undivided interest in the Entire Property provided
such sale shall not encumber the Property being purchased by
Buyer in violation of the terms hereof or the contemplated
Co-Tenancy Agreement.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the use and operation of the Property after the
Closing in the manner in which the Property has been used
and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Tenant and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Tenant and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
The provisions (d) - (f) above shall survive closing.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
13. Closing.
(a) Before the closing date, Seller will deposit into
escrow an executed limited warranty deed conveying insurable
title of the Property to Buyer, subject to the encumbrances
contained in paragraph 8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign the Co-
Tenancy Agreement, and deliver to the escrow holder any
other documents reasonably required by the escrow holder to
close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the Second Payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any ten-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
Buyer intends that this transaction qualify as an exchange
under Section 1031 of the Internal Revenue Code of 1986 and
regulations thereunder. Buyer intends to perfect the 1031
exchange by way of a simultaneous exchange of properties through
concurrently conditional closing escrows conducted under escrow
instructions that will qualify the transaction under Section
1031.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party, the party electing to cancel shall
deliver to escrow agent a notice containing the address of
the party in breach and stating that this Contract shall be
cancelled unless the breach is cured within 13 days
following the delivery of the notice to the escrow agent.
Within three days after receipt of such notice, the escrow
agent shall send it by United States Mail to the party in
breach at the address contained in the Notice and no further
notice shall be required. If the breach is not cured within
the 13 days following the delivery of the notice to the
escrow agent, this Contract shall be cancelled.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed by January 2, 1997,
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Net Lease Income & Growth Fund XIX Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
Buyer Initial: /s/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
If to Buyer:
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: WILLIAM E. MASON AND HAZEL MASON AS TENANTS IN COMMON
By: /s/ William E Mason 12-26-96
William E. Mason /s/ Gail K Sanfor,
Notary
Williamson, Co, TN
By: /s/ Hazel Mason com exp 4-1-97
Hazel Mason
SELLER: 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/ WEM /s/ HM
Purchase Agreement for Applebee's - Temple Terrace, FL
Exhibit A
Lot 1, of Terrace Walk, according to map or plat thereof as
recorded in Plat Book 70, Pages 33-1 and 33-2, of the Public
Records of Hillsborough County, Florida
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Applebee's Restaurant - Temple Terrace, FL)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 2nd day of Jan, 1997, by and
between William E. Mason and Hazel Mason as tenants in common
(hereinafter called "Mason"), and AEI Net Lease Income & Growth
Fund XIX Limited Partnership (hereinafter called "Fund XIX")
(Mason, Fund XIX (and any other Owner in Fee where the context so
indicates) being hereinafter sometimes collectively called "Co-
Tenants" and referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XIX presently owns an undivided 9.0963% interest in
and to and Mason presently owns an undivided 11.5416% interest in
and to and Balster presently owns an undivided 14.4270% interest
in and to and Janet Thompson presently owns an undivided 5.7170%
(also referred to herein as "Co-Tenant") interest in and to and
The Joan Koller Trust presently owns an undivided 11.9455% (also
referred to herein as "Co-Tenant") interest in and to, and
Patricia S. Marshall presently owns an undivided 15.4545% (also
referred to herein as "Co-Tenant")interest in and to and the Lee
Revocable Trust presently owns an undivided 16.3636% (also
referred to herein as "Co-Tenant") in and to and Robert E. Miller
presently owns an undivided 15.4545% (also referred to herein as
"Co-Tenant") in and to the land, situated in the City of Temple
Terrace, County of Hillsborough, and State of Florida, (legally
described upon Exhibit A attached hereto and hereby made a part
hereof) and in and to the improvements located thereon
(hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Mason's interest by
Fund XIX; the continued leasing of space within the Premises; for
the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Mason of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XIX, or its designated agent, successors or
assigns. Provided, however, if Fund XIX shall sell all of its
interest in the Premises, the duties and obligations of Fund XIX
respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary,
Co-Tenant Initial: /s/ WEM /s/ HM
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
each of the parties hereto agrees to be bound by the decisions of
Fund XIX with respect to all administrative, operational and
management matters of the property comprising the Premises,
including but not limited to the management of the net lease
agreement for the Premises. The parties hereto hereby designate
Fund XIX as their sole and exclusive agent to deal with any
property agent and to execute leases of space within the
Premises, including but not limited to any amendments, consents
to assignment, sublet, releases or modifications to leases or
guarantees of lease or easements affecting the Premises, on
behalf of all present or future Co-Tenants. Only Fund XIX may
obligate any Co-Tenant with respect to any expense for the
Premises.
As further set forth in paragraph 2 hereof, Fund XIX agrees
to require any Tenant of the Premises to name Mason as an insured
or additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XIX shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from Tenant within 30 days of commencement of this
agreement. In any event, Fund XIX shall distribute any insurance
proceeds it may receive, to the extent consistent with any lease
on the Premises, to the Co-Tenants in proportion to their
respective ownership of the Premises.
2. Income and expenses shall be allocated among the Co-Tenants
in proportion to their respective share(s) of ownership. Shares
of net income shall be pro-rated for any partial calendar years
included within the term of this Agreement. Fund XIX may offset
against, pay to itself and deduct from any payment due to Mason
under this Agreement, and may pay to itself the amount of Mason's
share of any legitimate expenses of the Premises which are not
paid by Mason to Fund XIX or its assigns, within ten (10) days
after demand by Fund XIX. In the event there is insufficient
operating income from which to deduct Mason's unpaid share of
operating expenses, Fund XIX may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Tenant under terms of any lease agreement of the Premises..
Mason has elected to retain, and agrees to annually reimburse,
Fund XIX in the amount of $595 for the expenses, direct and
indirect, incurred by Fund XIX in providing quarterly accounting
and distributions of Mason's share of net income and for
tracking, reporting and assessing the calculation of Mason's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Mason
authorizes Fund XIX to deduct such amount from Mason's share of
revenue from the Premises. Mason may terminate this agreement
respecting quarterly accounting and distributions in this
paragraph at any time and seek to collect its share of rental
stream directly from the tenant.
Co-Tenant Initial: /s/ WEM /s/ HM
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XIX's principal office, and each Co-Tenant shall have access
to such books and may inspect and copy any part thereof during
normal business hours. Within ninety (90) days after the end of
each calendar year during the term hereof, Fund XIX shall prepare
an accurate income statement for the ownership of the Premises
for said calendar year and shall furnish copies of the same to
all Co-Tenants. Quarterly, as its share, Mason shall be entitled
to receive 11.5416% of all items of income and expense generated
by the Premises. Upon receipt of said accounting, if the
payments received by each Co-Tenant pursuant to this Paragraph 3
do not equal, in the aggregate, the amounts which each are
entitled to receive proportional to its share of ownership with
respect to said calendar year pursuant to Paragraph 2 hereof, an
appropriate adjustment shall be made so that each Co-Tenant
receives the amount to which it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XIX, shall,
within fifteen (15) business days after receipt of notice, make
payment to Fund XIX sufficient to pay said net operating losses
and to provide necessary operating capital for the Premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises. AEI may, at its discretion, use all or any
portion of the Credit Enhancement, paid to AEI by the lessee, in
satisfaction of AEI's proportionate share of required operating
capital. Said Credit Enhancement shall not be used for the
benefit of, or in payment of, any other Co-Tenant's share of
required operating capital.
5. Subject to the terms hereof, Co-Tenants may, at any time,
sell, finance, or otherwise create a lien upon their interest in
the Premises but only upon their interest and not upon any part
of the interest held, or owned, by any other Co-Tenant. All Co-
Tenants reserve the right to escrow proceeds from a sale of their
interests in the Premises to obtain tax deferral by the purchase
of replacement property. Mason's interest in the Premises is
subject to the rights of first refusal and other rights of Co-
Tenants and terms and conditions recited in the unrecorded Co-
Tenancy Agreement referred to in those certain instruments
recorded in Official Records Book 7253, page 672; Official
Records Book 7341, page 1266; Official Records Book 7903, page
1116; Official Records Book 7978, page 364; Official Records Book
8176, page 934; and Official Records Book 8353, page 835, all of
public records of Hillsborough County, Florida.
6. If any Co-Tenant shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute, or
set forth herein.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted
Co-Tenant Initial: /s/ WEM /s/ HM
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
assigns until the expiration date plus extensions of the net
lease agreement or upon the sale of the entire Premises and
proportional disbursement of the proceeds thereof, whichever
shall first occur. Unless specifically identified as a personal
contract right or obligation herein, this agreement shall run
with any interest in the Premises and with the title thereto.
Once any person, party or entity has ceased to have an interest
in fee in the Premises, it shall not be bound by, subject to or
benefit from the terms hereof; but its heirs, executors,
administrators, personal representatives, successors or assigns,
as the case may be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XIX:
AEI Net Lease Income & Growth Fund XIX Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Mason:
W.E. & Hazel Mason
8300 Sawyer Brown Rd., Q-308
Nashville, TN 37221
If to Balster:
Teresa and William Balster
7690 W. Fish Lake Road
Maple Grove, MN 55311
If to Thompson:
Janet Thompson
27598 Linwood Circle N.
Olmsted, OH 44070
If to the Joan Koller Trust:
Joan Koller
16001 Ballantine Lane
Huntington Beach, CA 92647
Co-Tenant Initial: /s/ WEM /s/ HM
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
If to Patricia Marshall:
Patricia Marshall
1141 Randolph Road
McLean, VA 22101
If to Lee Revocable Trust:
Dale V. or Alice N. Lee
10831 E. Bellflower Drive
Sun Lakes, AZ 85248-9241
If to Robert E. Miller:
Robert E. Miller
1402 Sail Harbor Circle
Tarpon Springs, FL 34689
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Mason William E. Mason and Hazel Mason as tenants in common
By: /s/ William E Mason
William E. Mason
By: /s/ Hazel Mason
Hazel Mason
WITNESS:
/s/ Tammy H. Ward
Tammy H. Ward
(Print Name)
WITNESS:
/s/ Patti D Morris
Patti D. Morris
(Print Name)
STATE OF Tennessee)
) ss
COUNTY OF Williamson)
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 26th day of December,1996, by Gail R Sanford, Notary
Public.
com exp: 4-1-97
/s/ Gail R Sanford
Co-Tenant Initial: /s/ WEM /s/ H.M.
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
Fund XIX AEI Net Lease Income & Growth Fund XIX Limited Partnership
By: AEI Fund Management XIX, Inc., its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Laura M. Steidl
Laura M. Steidl
(Print Name)
WITNESS:
/s/ Jo Ann Rath
Jo Ann Rath
(Print Name)
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 2nd day of January,
1997, Robert P. Johnson, President of AEI Fund Management XIX,
Inc., corporate general partner of AEI Net Lease Income & Growth
Fund XIX Limited Partnership who executed the foregoing
instrument in said capacity and on behalf of the corporation in
its capacity as corporate general partner, on behalf of said
limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial: /s/ WEM /s/ H.M.
Co-Tenancy Agreement for Applebee's Restaurant - Temple Terrace, FL
Exhibit A
Lot 1, of Terrace Walk, according to map or plat thereof as
recorded in Plat Book 70, Pages 33-1 and 33-2, of the Public
Records of Hillsborough County, Florida.
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<NAME> AEI NET LEASE INCOME & GROWTH FUND XIX LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,477,783
<SECURITIES> 0
<RECEIVABLES> 86,891
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<CURRENT-ASSETS> 2,564,674
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<DEPRECIATION> (881,049)
<TOTAL-ASSETS> 17,707,873
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0
0
<COMMON> 0
<OTHER-SE> 17,249,399
<TOTAL-LIABILITY-AND-EQUITY> 17,707,873
<SALES> 0
<TOTAL-REVENUES> 2,124,542
<CGS> 0
<TOTAL-COSTS> 693,312
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<INCOME-CONTINUING> 2,003,157
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