SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: June 30, 1998
Commission file number: 0-23778
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1729121
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(651) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 1998 and December 31, 1997
Statements for the Periods ended June 30, 1998 and 1997:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,757,207 $ 2,112,414
Receivables 0 65,985
----------- -----------
Total Current Assets 2,757,207 2,178,399
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 6,553,532 6,650,715
Buildings and Equipment 10,649,400 10,879,290
Property Acquisition Costs 78,423 30,207
Accumulated Depreciation (1,134,799) (972,278)
----------- -----------
Net Investments in Real Estate 16,146,556 16,587,934
----------- -----------
Total Assets $18,903,763 $18,766,333
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 74,686 $ 98,419
Distributions Payable 424,509 194,835
Unearned Rent 40,890 0
----------- -----------
Total Current Liabilities 540,085 293,254
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (23,304) (22,210)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,652 Units outstanding 18,386,982 18,495,289
----------- -----------
Total Partners' Capital 18,363,678 18,473,079
----------- -----------
Total Liabilities and Partners' Capital $18,903,763 $18,766,333
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Three Months Ended Six Months Ended
6/30/98 6/30/97 6/30/98 6/30/97
INCOME:
Rent $ 471,928 $ 472,339 $ 944,844 $ 949,688
Investment Income 36,418 25,848 72,679 56,589
---------- ---------- ---------- ----------
Total Income 508,346 498,187 1,017,523 1,006,277
---------- ---------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 64,198 70,475 135,343 121,151
Partnership Administration
and Property Management -
Unrelated Parties 28,575 27,888 61,412 50,202
Depreciation 92,697 98,715 185,544 198,441
---------- ---------- ---------- ----------
Total Expenses 185,470 197,078 382,299 369,794
---------- ---------- ---------- ----------
OPERATING INCOME 322,876 301,109 635,224 636,483
GAIN ON SALE OF REAL ESTATE 0 2 134,164 38,694
---------- ---------- ---------- ----------
NET INCOME $ 322,876 $ 301,111 $ 769,388 $ 675,177
========== ========== ========== ==========
NET INCOME ALLOCATED:
General Partners $ 3,229 $ 3,011 $ 7,694 $ 6,752
Limited Partners 319,647 298,100 761,694 668,425
---------- ---------- ---------- ----------
$ 322,876 $ 301,111 $ 769,388 $ 675,177
========== ========== ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,385 and 23,652 weighted average
Units outstanding in 1998 and 1997,
respectively) $ 13.67 $ 12.60 $ 32.57 $ 28.26
========== ========== ========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 769,388 $ 675,177
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 185,544 198,441
Gain on Sale of Real Estate (134,164) (38,694)
(Increase) Decrease in Receivables 65,985 (48,336)
Decrease in Payable to
AEI Fund Management, Inc. (23,733) (33,773)
Increase in Unearned Rent 40,890 14,527
----------- -----------
Total Adjustments 134,522 92,165
----------- -----------
Net Cash Provided By
Operating Activities 903,910 767,342
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (48,217) (714,900)
Proceeds from Sale of Real Estate 438,215 454,719
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 389,998 (260,181)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable 229,674 (417)
Distributions to Partners (878,789) (969,698)
----------- -----------
Net Cash Used For
Financing Activities (649,115) (970,115)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 644,793 (462,954)
CASH AND CASH EQUIVALENTS, beginning of period 2,112,414 2,177,670
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 2,757,207 $ 1,714,716
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ (14,833) $19,225,611 $19,210,778 23,652.30
Distributions (9,697) (960,001) (969,698)
Net Income 6,752 668,425 675,177
--------- ----------- ----------- -----------
BALANCE, June 30, 1997 $ (17,778) $18,934,035 $18,916,257 23,652.30
========= =========== =========== ===========
BALANCE, December 31, 1997 $ (22,210) $18,495,289 $18,473,079 23,385.09
Distributions (8,788) (870,001) (878,789)
Net Income 7,694 761,694 769,388
--------- ----------- ----------- -----------
BALANCE, June 30, 1998 $ (23,304) $18,386,982 $18,363,678 23,385.09
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Net Lease Income & Growth Fund XX Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XX, Inc.
(AFM), the Managing General Partner of the Partnership.
Robert P. Johnson, the President and sole shareholder of
AFM, serves as the Individual General Partner of the
Partnership. An affiliate of AFM, AEI Fund Management,
Inc., performs the administrative and operating functions
for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on June 30, 1993 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. On January 19, 1995, the
Partnership's offering terminated when the maximum
subscription limit of 24,000 Limited Partnership Units
($24,000,000) was reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$24,000,000 and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 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 99% to the Limited Partners and 1% to the General
Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 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.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
On December 21, 1995, the Partnership purchased a 33.0%
interest in a Media Play retail store in Apple Valley,
Minnesota for $1,422,701. 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 was 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.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Partnership's interest in the Media Play was
approximately $726,000. In the fourth quarter of 1997, a
charge to operations for real estate impairment of $626,800
was recognized, which is the difference between the book
value at December 31, 1997 of $1,352,800 and the estimated
market value of $726,000. The charge was recorded against
the cost of the land, building and equipment.
On April 21, 1997, the Partnership purchased a 37.0%
interest in a parcel of land in Schaumburg, Illinois for
$653,756. The land is leased to Champps Americana, Inc.
(Champps) under a Lease Agreement with a primary term of 20
years and annual rental payments of $49,910. Effective
October 17, 1997, the annual rent was increased to $76,647.
Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership advanced funds to Champps for
the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective October 17, 1997, the
interest rate was increased to 10.75%. On December 31,
1997, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$176,405. The Partnership's share of the total acquisition
costs, including the cost of the land, was $1,676,195. The
remaining interests in the property are owned by AEI Income
& Growth Fund XXI Limited Partnership and Net Lease Income &
Growth Fund 84-A Limited Partnership, affiliates of the
Partnership.
Through December 31, 1997, the Partnership sold 98.8823% of
the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in
seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,439,965
which resulted in a total net gain of $284,712. The total
cost and related accumulated depreciation of the interests
sold was $1,226,615 and $71,362, respectively. For the six
months ended June 30, 1997, the net gain was $67,061.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through June 30, 1998, the Partnership sold 88.04128% of its
interest in the Applebee's restaurant in Middletown, Ohio,
in six separate transactions to unrelated third parties.
The Partnership received total net sale proceeds of
$1,322,934 which resulted in a total net gain of $389,903.
The total cost and related accumulated depreciation of the
interests sold was $1,026,857 and $93,826, respectively.
For the six months ended June 30, 1998, the net gain was
$78,734.
On January 27, 1998, the Partnership sold 5.50031% of its
interest in the Champps Americana restaurant in Lyndhurst,
Ohio to an unrelated third party. The Partnership received
net sale proceeds of $184,032 which resulted in a net gain
of $41,140. At the time of the sale, the cost and related
accumulated depreciation of the interest sold was $149,183
and $6,291, respectively.
In May, 1997, the Partnership sold 3,739 square feet of land
from the Red Robin property on Jamboree Drive in Colorado
Springs, Colorado, pursuant to a Right of Way Agreement with
the state of Colorado Department of Transportation. The
Partnership received net proceeds of $37,052 which, in 1997,
resulted in a net loss of $36,025 of which $28,367 was
recognized in the first six months of 1997. The original
cost of the parcel of land was $73,077. The Partnership
believed the state of Colorado undervalued the land and
successfully negotiated to receive additional net proceeds
of $14,290, which was recognized as a gain in the first
quarter of 1998.
During the first six months of 1998 and 1997, the
Partnership distributed net sale proceeds of $58,021 and
$65,376 to the Limited and General Partners as part of their
regular quarterly distributions which represented a return
of capital of $2.46 and 2.74 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 has incurred net costs of $821,723 relating
to the review of potential property acquisitions. Of these
costs, $743,300 have been capitalized and allocated to land,
building and equipment. The remaining costs of $78,423 have
been capitalized and will be allocated to property
acquisitions in future periods.
(4) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the six months ended June 30, 1998 and 1997, the
Partnership recognized rental income of $944,844 and $949,688,
respectively. During the same periods, the Partnership earned
investment income of $72,679 and $56,589, respectively. In 1998,
rental income decreased as a result of the property sales and the
restructuring of the Media Play property discussed below. These
decreases were partially offset by additional rent received from
one property acquisition in 1997 and rent increases on six
properties.
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota experienced financial
difficulties and was aggressively 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.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Partnership's interest in the Media Play was approximately
$726,000. In the fourth quarter of 1997, a charge to operations
for real estate impairment of $626,800 was recognized, which is
the difference between the book value at December 31, 1997 of
$1,352,800 and the estimated market value of $726,000. The
charge was recorded against the cost of the land, building and
equipment.
During the six months ended June 30, 1998 and 1997, the
Partnership paid Partnership administration expenses to
affiliated parties of $135,343 and $121,151, 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 $61,412 and $50,202, 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 1998, when compared to 1997, is the result
of expenses incurred in 1998 related to the Media Play situation
discussed above.
As of June 30, 1998, the Partnership's cash distribution
rate was 7.25% on an annualized basis. Distributions of Net Cash
Flow to the General Partners were subordinated to the Limited
Partners as required in the Partnership Agreement. As a result,
99% of distributions and income were allocated to Limited
Partners and 1% to the General Partners.
Inflation has had a minimal effect on income from
operations. The Leases contain cost of living increases which
will result in an increase in rental income over the term of the
Leases. Inflation also may cause the Partnership's real estate
to appreciate in value. However, inflation and changing prices
may also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. AEI is currently analyzing its
computer hardware and software systems to determine what, if any,
resources need to be dedicated regarding Year 2000 issues. The
Partnership does not anticipate any significant operational
impact or incurring material costs as a result of AEI becoming
Year 2000 compliant.
Liquidity and Capital Resources
During the six months ended June 30, 1998, the
Partnership's cash balances increased $644,793 mainly as a result
of proceeds received from the sale of real estate. Net cash
provided by operating activities increased from $767,342 in 1997
to $903,910 in 1998 mainly as the result of net timing
differences in the collection of payments from the lessees and
the payment of expenses, which were partially offset by an
increase in expenses in 1998.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the six months ended June
30, 1998 and June 30, 1997, the Partnership generated cash flow
from the sale of real estate of $438,215 and $454,719,
respectively. During the same periods, the Partnership expended
$48,217 and $714,900, respectively, to invest in real properties
(inclusive of acquisition expenses), as the Partnership continued
to reinvest the cash generated from the property sales.
On April 21, 1997, the Partnership purchased a 37.0%
interest in a parcel of land in Schaumburg, Illinois for
$653,756. The land is leased to Champps Americana, Inc.
(Champps) under a Lease Agreement with a primary term of 20 years
and annual rental payments of $49,910. Effective October 17,
1997, the annual rent was increased to $76,647. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 7.0%. Effective
October 17, 1997, the interest rate was increased to 10.75%. On
December 31, 1997, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$176,405. The Partnership's share of the total acquisition
costs, including the cost of the land, was $1,676,195. The
remaining interests in the property are owned by AEI Income &
Growth Fund XXI Limited Partnership and Net Lease Income & Growth
Fund 84-A Limited Partnership, affiliates of the Partnership.
Through December 31, 1997, the Partnership sold 98.8823%
of the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in
seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,439,965 which
resulted in a total net gain of $284,712. The total cost and
related accumulated depreciation of the interests sold was
$1,226,615 and $71,362, respectively. For the six months ended
June 30, 1997, the net gain was $67,061.
Through June 30, 1998, the Partnership sold 88.04128% of
its interest in the Applebee's restaurant in Middletown, Ohio, in
six separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,322,934 which
resulted in a total net gain of $389,903. The total cost and
related accumulated depreciation of the interests sold was
$1,026,857 and $93,826, respectively. For the six months ended
June 30, 1998, the net gain was $78,734.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On January 27, 1998, the Partnership sold 5.50031% of its
interest in the Champps Americana restaurant in Lyndhurst, Ohio
to an unrelated third party. The Partnership received net sale
proceeds of $184,032 which resulted in a net gain of $41,140. At
the time of the sale, the cost and related accumulated
depreciation of the interest sold was $149,183 and $6,291,
respectively.
In May, 1997, the Partnership sold 3,739 square feet of
land from the Red Robin property on Jamboree Drive in Colorado
Springs, Colorado, pursuant to a Right of Way Agreement with the
state of Colorado Department of Transportation. The Partnership
received net proceeds of $37,052 which, in 1997, resulted in a
net loss of $36,025 of which $28,367 was recognized in the first
six months of 1997. The original cost of the parcel of land was
$73,077. The Partnership believed the state of Colorado
undervalued the land and successfully negotiated to receive
additional net proceeds of $14,290, which was recognized as a
gain in the first quarter of 1998.
During the first six months of 1998 and 1997, the
Partnership distributed net sale proceeds of $58,021 and $65,376
to the Limited and General Partners as part of their regular
quarterly distributions which represented a return of capital of
$2.46 and $2.74 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. The redemption payments generally are funded with cash
that would normally be paid as part of the regular quarterly
distributions. As a result, total distributions and
distributions payable fluctuate from year to year due to cash
used to fund redemption payments. Effective July 1, 1997, the
Partnership's distribution rate was reduced from 8.0% to 7.25%.
As a result, distributions during the first six months of 1997
were higher when compared to the same period in 1998.
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 1997, sixteen Limited Partners redeemed a total of
267.2 Partnership Units for $229,518 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, twenty-one
Limited Partners redeemed a total of 347.7 Partnership Units for
$312,465. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis
contains various "forward looking statements" within the meaning
of federal securities laws which represent management's
expectations or beliefs concerning future events, including
statements regarding anticipated application of cash, expected
returns from rental income, growth in revenue, taxation levels,
the sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward
looking statements made by the Partnership, must be evaluated in
the context of a number of factors that may affect the
Partnership's financial condition and results of operations,
including the following:
<bullet> Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
<bullet> the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for investors;
<bullet> resolution by the General Partners of conflicts with
which they may be confronted;
<bullet> the success of the General Partners of locating
properties with favorable risk return characteristics;
<bullet> the effect of tenant defaults; and
<bullet> the condition of the industries in which the tenants of
properties owned by the Partnership operate.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5.OTHER INFORMATION
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
27 Financial Data Schedule for period
ended June 30, 1998.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: July 31, 1998 AEI Net Lease Income & Growth Fund XX
Limited Partnership
By: AEI Fund Management XX, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000868740
<NAME> AEI NET LEASE INCOME & GROWTH FUND XIX LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,471,065
<SECURITIES> 0
<RECEIVABLES> 26,282
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,497,347
<PP&E> 14,342,026
<DEPRECIATION> (1,192,180)
<TOTAL-ASSETS> 15,647,193
<CURRENT-LIABILITIES> 420,926
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,226,267
<TOTAL-LIABILITY-AND-EQUITY> 15,647,193
<SALES> 0
<TOTAL-REVENUES> 916,438
<CGS> 0
<TOTAL-COSTS> 363,396
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 553,042
<INCOME-TAX> 0
<INCOME-CONTINUING> 553,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 553,042
<EPS-PRIMARY> 26.10
<EPS-DILUTED> 26.10
</TABLE>
