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: September 30, 1996
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)
(612) 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 September 30, 1996 and December 31, 1995
Statements for the Periods ended September 30, 1996 and 1995:
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
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,078,239 $ 4,833,630
Receivables 38,182 13,671
----------- -----------
Total Current Assets 1,116,421 4,847,301
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 7,337,686 6,075,887
Buildings and Equipment 11,617,222 9,218,410
Construction Advances 1,215,483 880,088
Property Acquisition Costs 130,839 174,903
Accumulated Depreciation (629,152) (352,389)
----------- -----------
Net Investments in Real Estate 19,672,078 15,996,899
----------- -----------
Total Assets $ 20,788,499 $ 20,844,200
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 57,569 $ 50,011
Distributions Payable 468,725 468,725
Unearned Rent 34,862 0
----------- -----------
Total Current Liabilities 561,156 518,736
----------- -----------
MINORITY INTEREST 1,027,753 789,000
PARTNERS' CAPITAL (DEFICIT):
General Partners (14,945) (11,576)
Limited Partners, $1,000 Unit value;
24,000 Units authorized and issued;
23,869 Units outstanding 19,214,535 19,548,040
----------- -----------
Total Partners' Capital 19,199,590 19,536,464
----------- -----------
Total Liabilities and Partners' Capital $ 20,788,499 $ 20,844,200
=========== ===========
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 SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
INCOME:
Rent $ 525,527 $ 331,177 $ 1,474,543 $ 960,965
Investment Income 43,383 126,249 159,627 406,000
--------- --------- ----------- -----------
Total Income 568,910 457,426 1,634,170 1,366,965
--------- --------- ----------- -----------
EXPENSES:
Partnership Administration -
Affiliates 60,315 60,514 171,081 193,030
Partnership Administration
and Property Management -
Unrelated Parties 6,973 4,822 30,917 30,218
Depreciation 102,210 61,640 284,023 178,448
--------- --------- ----------- -----------
Total Expenses 169,498 126,976 486,021 401,696
--------- --------- ----------- -----------
OPERATING INCOME 399,412 330,450 1,148,149 965,269
GAIN ON SALE OF REAL ESTATE 35,944 66,797 35,944 66,797
MINORITY INTEREST IN
OPERATING INCOME (23,047) (3,586) (66,426) (3,586)
--------- --------- ----------- -----------
NET INCOME $ 412,309 $ 393,661 $ 1,117,667 $ 1,028,480
========= ========= =========== ===========
NET INCOME ALLOCATED:
General Partners $ 4,124 $ 3,937 $ 11,177 $ 10,285
Limited Partners 408,185 389,724 1,106,490 1,018,195
--------- --------- ----------- -----------
$ 412,309 $ 393,661 $ 1,117,667 $ 1,028,480
========= ========= =========== ===========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,869, 24,000, 23,869 and
23.755 weighted average
Units outstanding for the
periods, respectively) $ 17.10 $ 16.24 $ 46.36 $ 42.86
========= ========= =========== ===========
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 SEPTEMBER 30
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,117,667 $ 1,028,480
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 284,023 178,448
Gain on Sale of Real Estate (35,944) (66,797)
(Increase) Decrease in Receivables (24,511) 31,973
Increase (Decrease) in Payable to
AEI Fund Management, Inc. 7,558 (7,346)
Increase in Unearned Rent 34,862 0
Minority Interest (11,812) (702)
----------- -----------
Total Adjustments 254,176 135,576
----------- -----------
Net Cash Provided By
Operating Activities 1,371,843 1,164,056
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (3,854,189) (2,691,685)
Proceeds from Sale of Real Estate 181,496 365,678
----------- -----------
Net Cash Used For
Investing Activities (3,672,693) (2,326,007)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Partners 0 1,942,224
Organization and Syndication Costs 0 (224,098)
Increase in Distributions Payable 0 90,420
Distributions to Partners (1,454,541) (1,439,397)
----------- -----------
Net Cash Provided By (Used For)
Financing Activities (1,454,541) 369,149
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,755,391) (792,802)
CASH AND CASH EQUIVALENTS,
beginning of period 4,833,630 7,526,387
----------- -----------
CASH AND CASH EQUIVALENTS,
end of period $ 1,078,239 $ 6,733,585
=========== ===========
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 SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (6,286) $18,354,747 $18,348,461 22,057.78
Capital Contributions 0 1,942,224 1,942,224 1,942.22
Organization and
Syndication Costs 0 (224,098) (224,098)
Distributions (14,394) (1,425,003) (1,439,397)
Net Income 10,285 1,018,195 1,028,480
--------- ----------- ----------- ----------
BALANCE, September 30,1995 $ (10,395) $19,666,065 $19,655,670 24,000.00
========= =========== =========== ==========
BALANCE, December 31, 1995 $ (11,576) $19,548,040 $19,536,464 23,868.50
Distributions (14,545) (1,439,996) (1,454,541)
Net Income 11,177 1,106,490 1,117,667
--------- ----------- ----------- ----------
BALANCE, September 30,1996 $ (14,944) $19,214,534 $19,199,590 23,868.50
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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 -
In 1995, the Partnership elected early adoption of the
Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." 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 is not
expected to have a material effect on the Partnership's
financial statements.
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 20 years except
for the Media Play property (18 years) and the Red Robin
restaurants, whose Lease Agreements expire on November 30,
2004, and December 31, 2007. The Leases contain renewal
options which may extend the Lease term an additional 10 to
25 years. The Leases contain rent clauses which entitle the
Partnership to receive additional rent in future years based
on stated rent increases. Certain lessees have been granted
options to purchase the property. Depending on the lease,
the purchase price is either determined by a formula, or is
the greater of the fair market value of the property or the
amount determined by a formula. In all cases, if the option
were to be exercised by the lessee, the purchase price would
be greater than the original cost of the property.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
The Partnership's properties are all commercial, single-
tenant buildings. The cost of the property and related
accumulated depreciation at September 30, 1996 are as
follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
HomeTown Buffet
Albuquerque, NM $ 602,859 $ 720,987 $ 1,323,846 $ 43,243
Red Robin
Colorado Springs, CO 979,057 1,323,210 2,302,267 115,781
Red Robin
Colorado Springs, CO 721,168 1,034,273 1,755,441 90,499
Arby's/Mrs. Winner's
Smyrna, GA 516,705 723,775 1,240,480 51,674
Applebee's
Middletown, OH 330,557 765,405 1,095,962 65,823
Denny's
Burleson, TX 374,721 548,759 923,480 34,356
Applebee's
McAllen, TX 463,553 856,551 1,320,104 59,483
Applebee's
Lafayette, LA 416,197 760,362 1,176,559 46,419
Applebee's
Brownsville, TX 523,042 855,694 1,378,736 36,497
Denny's
Grapevine, TX 722,668 632,053 1,354,721 19,483
Media Play
Apple Valley, MN 425,360 997,340 1,422,700 27,110
Garden Ridge
Pineville, NC 526,382 1,097,604 1,623,986 18,293
Champps Americana
Lyndhurst, OH 731,677 1,301,209 2,032,886 20,491
----------- ----------- ----------- -----------
$ 7,333,946 $11,617,222 $18,951,168 $ 629,152
=========== =========== =========== ===========
On March 28, 1996, the Partnership purchased a 18.50%
interest in a Garden Ridge store in Pineville, North
Carolina for $1,623,986. The property is leased to Garden
Ridge, Inc. under a Lease Agreement with a primary term of
20 years and annual rental payments of $174,319. The
remaining interest in the property was purchased by AEI Net
Lease Income & Growth Fund XIX Limited Partnership and AEI
Income & Growth Fund XXI Limited Partnership, affiliates of
the Partnership.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In August, 1995, the Partnership entered into an Agreement
to purchase an Italianni's restaurant in Columbus, Ohio for
approximately $1,440,000. The Agreement with Ristoranti
Karlo, Inc. included a Lease Agreement with a primary term
of 15 years and annual rental payments of approximately
$162,000. Through September 30, 1996, the Partnership had
advanced $1,215,483 for the construction of the property and
was charging interest on the Note at the rate of 7.0%. On
May 1, 1996, the Partnership began charging interest on the
Note at the rate of 11.25%.
In October, 1996, the parties agreed to terminate the
Agreement. Ristoranti Karlo, Inc. will reimburse the
Partnership for all construction advances, accrued interest
and for certain expenses.
On April 10, 1996, the Partnership purchased a 90.71346%
interest in a Champps Americana restaurant in Lyndhurst,
Ohio for $1,928,515. The property is leased to Americana
Dining Corporation under a Lease Agreement with a primary
term of 20 years and annual rental payments of $208,550.
The remaining interest in the property was purchased by the
Individual General Partner of the Partnership, and AEI
Institutional Net Lease Fund '93, an affiliate of the
Partnership.
On September 27, 1996, the Partnership sold 12.3188% of the
Arby's/Mrs. Winner's restaurant in Smyrna, Georgia to an
unrelated third party. The Partnership received net sale
proceeds of $181,496 which resulted in a net gain of
$35,944. At the time of sale, the cost and related
accumulated depreciation of the interest sold was $152,812
and $7,260, respectively.
During 1995, the Partnership sold 59.8646% of the HomeTown
Buffet restaurant in Albuquerque, New Mexico, in four
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $988,838
which resulted in a total net gain of $225,180. The total
cost and accumulated depreciation of the interests sold was
$792,515 and $28,857, respectively.
The Partnership owns the above properties as tenants-in-
common with the unrelated third parties. The management of
the properties are governed by co-tenancy agreements between
the Partnership and the unrelated third parties, which grant
the Partnership the authority to control the management of
the property. For property owned as tenants-in-common with
third parties, other than affiliated partnerships, the
Partnership accounts for its interest under the full
consolidation method whereby the unrelated third parties'
interests in the property is reflected in the Partnership's
financial statements as a minority interest. For purposes
of financial reporting, the Partnership consolidates
properties in which it is the controlling tenant-in-common
despite having only a minority equity interest in the
property. The Partnership also consolidates the Individual
General Partner's interest in the Champps Americana
restaurant in Lyndhurst, Ohio.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
During the first nine months of 1996 and the year 1995, the
Partnership distributed $100,570 and $486,375 of net sale
proceeds to the Limited and General Partners as part of
their regular quarterly distributions, which represented a
return of capital of $4.17 and $20.24 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 $731,893 relating
to the review of potential property acquisitions. Of these
costs, $601,054 have been capitalized and allocated to land,
building and equipment. The remaining costs of $130,839
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 nine months ended September 30, 1996 and 1995, the
Partnership recognized rental income of $1,474,543 and $960,965,
respectively. During the same periods, the Partnership earned
$159,627 and $406,000 in investment income from subscription
proceeds which were invested in short-term money market accounts,
commercial paper, federal agency notes, and construction
advances. This investment income constituted 10% and 30% of
total income for the nine months ended September 30, 1996 and
1995, respectively. The percentage of total income represented
by investment income declines as subscription proceeds are
invested in properties.
The annual rent from the thirteen properties acquired, as
of September 30, 1996, is approximately $1,985,000. Since all
properties are leased under triple-net leases, the Partnership
has not incurred, and does not expect to incur, expenses
associated with the operation or maintenance of properties and
the rental income represents the cash flow generated by the
properties to the Partnership.
During the nine months ended September 30, 1996 and 1995,
the Partnership paid Partnership administration expenses to
affiliated parties of $171,081 and $193,030, respectively. These
administration expenses include initial start-up costs and
expenses associated with the management of the properties,
processing distributions, reporting requirements and
correspondence to the Limited Partners. The administrative
expenses decrease after completion of the offering and
acquisition phases of the Partnership's operations. During the
same periods, the Partnership incurred Partnership administration
and property management expenses from unrelated parties of
$30,917 and $30,218, respectively. These expenses represent
direct payments to third parties for legal and filing fees,
direct administrative costs, outside audit and accounting costs,
insurance and other property costs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
The Partnership distributes all of its net income during
the offering and acquisition phases, and if net income after
deductions for depreciation is not sufficient to fund the
distributions, the Partnership may distribute other available
cash that constitutes capital for accounting purposes.
As of September 30, 1996, the Partnership's cash
distribution rate was 8.0% 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.
Since the Partnership has only recently purchased its real
estate, 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
The Partnership's primary sources of cash are from
proceeds from the sale of Units, investment income, rental income
and proceeds from the sale of property. Its primary uses of cash
are investment in real properties, payment of expenses involved
in the sale of units, the organization of the Partnership, the
acquisition of properties, the management of properties, the
administration of the Partnership, and the payment of
distributions.
While the Partnership is purchasing properties, cash flow
from investing activities (investment in real property) will
remain negative and will constitute the principal use of the
Partnership's available cash flow. This use of cash flow for
investing activities was partially offset by proceeds from the
sale of property.
On September 27, 1996, the Partnership sold 12.3188% of
the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia to an
unrelated third party. The Partnership received net sale
proceeds of $181,496 which resulted in a net gain of $35,944. At
the time of sale, the cost and related accumulated depreciation
of the interest sold was $152,812 and $7,260, respectively.
During 1995, the Partnership sold 59.8646% of the HomeTown
Buffet restaurant in Albuquerque, New Mexico, in four separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $988,838 which resulted in a
total net gain of $225,180. The total cost and accumulated
depreciation of the interests sold was $792,515 and $28,857,
respectively.
The Partnership owns the above properties as tenants-in-
common with the unrelated third parties. The management of the
properties are governed by co-tenancy agreements between the
Partnership and the unrelated third parties, which grant the
Partnership the authority to control the management of the
property. The Partnership accounts for its interest under the
full consolidation method whereby the unrelated third parties'
interests in the property are reflected in the Partnership's
financial statements as a minority interest. The Partnership
also consolidates the Individual General Partner's interest in
the Champps Americana restaurant in Lyndhurst, Ohio.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the first nine months of 1996 and the year 1995,
the Partnership distributed $100,570 and $486,375 of net sale
proceeds to the Limited and General Partners as part of their
regular quarterly distributions, which represented a return of
capital of $4.17 and $20.24 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.
Before the acquisition of properties, cash flow from
operating activities is not significant. Net income after
adjustment for depreciation, which becomes the largest component
of cash flow from operating activities and the largest component
of cash flow after the completion of the acquisition phase, is
lower during the first few years of operations as administrative
expenses remain high and a large amount of the Partnership's
assets remain invested on a short-term basis in lower-yielding
cash equivalents.
Until the offering of Units was completed, the
Partnership's primary source of cash flow was from the sale of
Limited Partnership Units. From January 20, 1993 to June 30,
1993, the minimum number of Limited Partnership Units (1,500)
needed to form the Partnership were sold and on June 30, 1993, a
total of 1,637.473 Units ($1,637,473) were transferred into the
Partnership. 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. From subscription
proceeds, the Partnership paid organization and syndication costs
(which constitute a reduction of capital) of $3,282,051.
After completion of the acquisition phase, 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 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.
On October 1, 1996, sixteen Limited Partners redeemed a
total of 216.2 Partnership Units for $194,115 in accordance with
the Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1995, five Limited
Partners redeemed a total of 131.5 Partnership Units for
$118,350. 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.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Purchase Agreement dated September 10, 1996
between the Partnership and the
Margaret E. Brust Irrevocable Trust
relating to the property at 4950 South
Cobb Drive, Smyrna, Georgia.
10.2 Property Co-tenancy Ownership
Agreement dated September 27, 1996
between the Partnership and the Margaret
E. Brust Irrevocable Trust relating to
the property at 4950 South Cobb Drive,
Smyrna, Georgia.
27 Financial Data Schedule for period
ended September 30, 1996.
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: November 13, 1996 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)
PURCHASE AGREEMENT
Arby's/Mrs. Winners Restaurant - Smyrna, GA
This AGREEMENT, entered into effective as of the 10 of Sept, 1996.
l. Parties. Seller is AEI Net Lease Income & Growth Fund XX
Limited Partnership which owns an undivided 100.00% interest in
the fee title to that certain real property legally described in
the attached Exhibit "A" (the "Entire Property") Buyer is
Margaret E. Brust Irrevocable Trust, Margaret E. Brust, Trustee
("Buyer"). Seller wishes to sell and Buyer wishes to buy a
portion as Tenant in Common of Seller's interest in the Entire
Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 12.3188 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
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.
(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 September 27,
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.
(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.
Buyer Inital: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners-Smyrna, GA
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 requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay one-half of escrow fees,
the cost of the title commitment and any brokerage commissions
payable. The buyer will pay the cost of issuing a Standard
Owners Title Insurance Policy in the full amount of the purchase
price. Buyer will pay all recording fees, one-half of the escrow
fees, and the cost of an update to the Survey in Sellers
possession (if an update is required by Buyer.) Each party will
pay its own attorney's fees and costs to document and close this
transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing shall be the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and therafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between AEI Net Lease
Income & Growth Fund XX Limited Partnership and RTM Georgia,
Inc., dated May 16, 1994, 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. The above referenced
lease agreement also has a first right of refusal in favor
of the Tenant as set forth in article 35 of said lease
agreement. Buyer's purchase of the Property is subject to
receipt by Seller of a waiver of first right of refusal from
Tenant, said waiver to be signed by tenant and received by
Seller prior to close of escrow. If Seller cannot obtain
such waiver, the First Payment shall be returned to Buyer
and this Agreement shall become null and void.
(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 that would materially affect the Property and be
binding on Buyer after the closing date without Buyer's
prior consent, which will not be unreasonably withheld.
However, Buyer acknowledges that Seller retains the right
both prior to and after the Closing Date to freely transfer
all or a portion of Seller's remaining undivided interest in
the Entire Property provided such sale shall not encumber
the Property being purchased by Buyer in violation of the
terms hereof or the contemplated Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
(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,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's negligence or intentional
misconduct in violation of applicable state or federal law
or regulation.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Lessee and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no Warranty or representation, Express or Implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
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.
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
(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.
(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
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, Ga
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 wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to AmeriTitle who will act as
Facilitator to perfect the 1031 exchange by preparing an
agreement of exchange of Real Property whereby AmeriTitle will be
an independent third party purchasing the ownership interest in
subject property from Seller and selling the ownership interest
in subject property to Buyer under the same terms and conditions
as documented in this Purchase Agreement. Buyer asks the Seller,
and Seller agrees to cooperate in the perfection of such an
exchange if at no additional cost or expense to Seller or delay
in time. Buyer hereby indemnifies and holds Seller harmless from
any claims and/or actions resulting from said exchange. Pursuant
to the direction of AmeriTitle, Seller will deed the property to
Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party or because escrow fails to close by
the agreed date, the party electing to cancel shall deliver
to escrow agent a notice containing the address of the party
in breach and stating that this Contract shall be cancelled
unless the breach is cured within 13 days following the
delivery of the notice to the escrow agent. Within three
days after receipt of such notice, the escrow agent shall
send it by United States Mail to the party in breach at the
address contained in the Notice and no further notice shall
be required. If the breach is not cured within the 13 days
following the delivery of the notice to the escrow agent,
this Contract shall be cancelled.
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
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 September 27, 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 XX Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
Margaret E. Brust
772 N. Craven St.
Monmouth, OR 97361
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
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: Margaret E. Brust Irrevocable Trust
By: /s/ Margaret E. Brust, Trustee
Margaret E. Brust, Trustee
SELLER: AEI NET LEASE INCOME & GROWTH FUND XX LIMITED
PARTNERSHIP, a Minnesota limited partnership.
By: AEI Fund Management XX, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
Buyer Initial: /s/ MEB
Purchase Agreement for Arby's/Mrs. Winners - Smyrna, GA
EXHIBIT A
ALL THAT TRACT or parcel of land lying and being in Land
Lots 688, 689,752 and 753 of the 17th District, 2nd Section
of Cobb County, Georgia, containing 1.071 acres, same being
more particularly described as follows:
TO FIND THE TRUE POINT OF BEGINNING, begin at the point of
intersection of the westerly Right-of-Way Line of South Cobb
Drive (Two-hundred (200') foot Right-of-Way) and of the
southerly Right-of-Way Line of Kenwood Road (Fifty (50')
foot Right-of Way); thence traveling along the westerly
Right-of-Way Line of said South Cobb Drive south 11 degrees
59 minutes 32 seconds east a distance of 36.03 feet to a
point on said Right-of-Way Line; thence continuing along
said Right-of-Way line south 09 degrees 19 minutes 41
seconds east a distance of 166.01 feet to a point on said
Right-of-Way Line; thence continuing along said Right-of-Way
Line along a curve to the left an arc distance of 18.12 feet
(said arc being of 18.12 feet and having a radius of
2,964.79 feet) to an iron pin set on said Right-of-Way Line
and at the southeast corner of property now or formerly
owned by Wendy's International, Inc., which iron pin set is
the TRUE POINT OF BEGINNING; FROM THE TRUE POINT OF
BEGINNING as thus established continuing along said Right-of
Way Line along a curve to the left an arc distance of 161.96
feet (said arc being subtended by a chord bearing south 12
degrees 56 minutes 36 seconds east a chord distance of
161.94 feet and having a radius of 2,964.79 feet) to an iron
pin set on said Right-of Way Line and the northeast corner
of the property now or formerly owned by Checkers
Restaurant; thence leaving said Right-of Way Line and
traveling along the northwesterly line of said Checkers
property south 71 degrees 15 minutes 52 seconds west a
distance 221.74 feet to an iron pin set; thence traveling
north 18 degrees 44 minutes 08 seconds west a distance of
132.30 feet to an iron pin set; thence traveling north 07
degrees 31 minutes 35 seconds east a distance of 131.18 feet
to an iron pin set at the southwest corner of said Wendy's
property; thence traveling along the southeasterly line of
said Wendy's property south 82 degrees 28 minutes 25 seconds
east a distance of 200.76 feet to an iron pin set, and the
TRUE POINT OF BEGINNING.
ALL AS SHOWN on that certain survey for RTM Georgia, Inc.,
prepared by Federer-Ruppert & Associates, bearing the seal
of James W. Woolley, Georgia Registered Land Surveyor Number
1478, dated January 17, 1994, last revised May 10,1994.
TOGETHER WITH all rights with respect to the above property
reserved in Limited Warranty Deed from Wilson Financial
Corporation, a Florida Corporation to Wendy's International,
Inc. an Ohio Corporation, dated December 26, 1989, filed for
record December 28, 1989 at 2:01 p.m., recorded in Deed Book
5590, Page 288, Records of Cobb County, Georgia.
TOGETHER WITH all rights with respect to the above property
reserved in that certain Limited Warranty Deed from American
Founders Life Insurance Company, a Texas corporation to
Robert G. Brown, dated June 8,1992, filed for record June
9,1992 at 10:21 a.m., recorded in Deed Book 6682, Page 118,
aforesaid Records.
TOGETHER WITH all rights with respect to the above property
set forth in Easement Grant by and between Wilson Financial
Corporation, a Florida corporation and Wendy's
International, Inc., an Ohio corporation, dated December 26,
1989, filed for record December 28, 1989 at 2:01 p.m.,
recorded in Deed Book 5590, Page 291, aforesaid Records; as
amended by that certain Amendment to Easement Grant, dated
June 30, 1993, filed for record July 1, 1993 at 2:15 p.m.,
recorded in Deed Book 7448, Page 421, aforesaid Records.
TOGETHER WITH all rights with respect to the above property
set forth I Easement Agreement by and between American
Founders Life Insurance Company, a Texas corporation and
Robert G. Brown, dated June 8,1992, filed for record June 9,
1992 at 10:21 a.m., recorded in Deed Book 6682, Page 123,
aforesaid Records; as amended by that certain Amendment to
Easement Agreement, dated June 30, 1993, filed for July 1,
1993 at 2:15 p.m., recorded in Deed Book 7448, Page 433,
aforesaid Records.
TOGETHER WITH all rights granted in that certain Sign
Easement by and between American Founders Life Insurance
Company, a Texas corporation and RTM Georgia, Inc., dated
June 30, 1993, file for record July 1, 1993 at 2:15 p.m.,
recorded in Deed Book 7448, Page 467, aforesaid Records.
TOGETHER WITH all rights granted in that certain New
Driveway Easement Grant by and between American Founders
Life Insurance Company and RTM Georgia, Inc., dated June 30,
1993, filed for record July 1, 1993 at 2:15 p.m., recorded
in Deed Book 7448, Page 450, aforesaid Records.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Arby's/Mrs. Winners Restaurant - Smyrna, GA)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 27th day of Sept, 1996, by and
between Margaret E. Brust Irrevocable Trust, (hereinafter called
"Brust"), and AEI Net Lease Income & Growth Fund XX Limited
Partnership (hereinafter called "Fund XX") (Brust, Fund XX (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 XX presently owns an undivided 87.6812% interest in
and to, and Brust presently owns and undivided 12.3188% interest
in and to, the land, situated in the City of Smyrna, County of
Cobb, and State of GA, (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 Brust's interest by
Fund XX; 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 Brust 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 XX, or its designated agent, successors or
assigns. Provided, however, if Fund XX shall sell all of its
interest in the Premises, the duties and obligations of Fund XX
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 XX 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 XX 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 XX may obligate any Co-Tenant with respect to
any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XX agrees to
require any lessee of the Premises to name Brust as an insured or
additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XX 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 XX 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.
Co-Tenant Initial: /s/ MEB
Co-Tenancy Agreement for Arby's/Mrs. Winners - Smyrna, GA
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 XX may offset against, pay to
itself and deduct from any payment due to Brust under this
Agreement, and may pay to itself the amount of Brust's share of
any legitimate expenses of the Premises which are not paid by
Brust to Fund XX or its assigns, within ten (10) days after
demand by Fund XX. In the event there is insufficient operating
income from which to deduct Brust's unpaid share of operating
expenses, Fund XX 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.
Brust has elected to retain, and agrees to annually reimburse,
Fund XX in the amount of $595 for the expenses, direct and
indirect, incurred by Fund XX in providing quarterly accounting
and distributions of Brust's share of net income and for
tracking, reporting and assessing the calculation of Brust's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Brust
authorizes Fund XX to deduct such amount from Brust's share of
revenue. Brust 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 XX'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 XX 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, Brust shall be entitled
to receive 12.3188% of all items of income and expense generated
by the Premises, and Fund XX shall be entitled to receive
87.6812% 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 XX, shall, within
fifteen (15) business days after receipt of notice, make payment
to Fund XX sufficient to pay said net operating losses and to
provide necessary operating capital for the premises and to pay
for said capital improvements, repairs and/or replacements, all
in proportion to their undivided interests in and to the
Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-Tenants reserve the right
to escrow proceeds from a sale of their interests in the Premises
to obtain tax deferral by the purchase of replacement property.
Co-Tenant Initial: /s/ MEB
Co-Tenancy Agreement for Arby's/Mrs. Winners - Smyrna, GA
6. If any Co-Tenant, shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This Agreement shall continue in full force and effect and
shall bind and inure to the benefit of the Co-Tenant and their
respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until the
expiration date plus extensions of the net lease agreement or
upon the sale of the entire Premises in accordance with the terms
hereof and proper disbursement of the proceeds thereof, whichever
shall first occur. Unless specifically identified as a personal
contract right or obligation herein, this agreement shall run
with any interest in the Premises and with the title thereto.
Once any person, party or entity has ceased to have an interest
in fee in the Premises, it shall not be bound by, subject to or
benefit from the terms hereof; but its heirs, executors,
administrators, personal representatives, successors or assigns,
as the case may be, shall be substituted for it hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XX:
AEI Net Lease Income & Growth Fund XX Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
If to Brust:
Margaret E. Brust, Trustee
772 N. Craven St.
Monmouth, OR 97361
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
10. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
11. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
Co-Tenant Initial: /s/ MEB
Co-Tenancy Agreement for Arby's/Mrs. Winners - Smyrna, GA
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.
Brust Margaret E. Brust Irrevocable Trust
By: /s/ Margaret E. Brust, Trustee
Margaret E. Brust, Trustee
STATE OF Oregon )
) ss [notary seal]
COUNTY OF Marion )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this 10th day of September,1996, by Carole Rhoden, Notary
Public.
Fund XX AEI Net Lease Income & Growth Fund XX Limited Partnership
By: AEI Fund Management XX, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
Witness By: /s/ Laura Steidl
Witness By: /s/ Sadie jo D. Hansen
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 10th day of October,
1996, Robert P. Johnson, President of AEI Fund Management XX,
Inc., corporate general partner of AEI Real Estate Fund XX
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/ MEB
Co-Tenancy Agreement for Arby's/ Mrs. Winners - Smyrna, GA
EXHIBIT A
ALL THAT TRACT or parcel of land lying and being in Land Lots
688,689, 752 and 753 of the 17th District, 2nd Section of Cobb
County, Georgia, containing 1.071 acres, same being more
particularly described as follows:
TO FIND THE TRUE POINT OF BEGINNING, begin at the point of
intersection of the westerly Right-of-Way Line of South Cobb
Drive (Two-hundred (200') foot Right-of-Way) and of the southerly
Right-of-Way Line of Kenwood Road (Fifty (50') foot Right-of
Way); thence traveling along the westerly Right-of-Way Line of
said South Cobb Drive south 11 degrees 59 minutes 32 seconds east
a distance of 36.03 feet to a point on said Right-of- Way Line;
thence continuing along said Right-of-Way Line south 09 degrees
19 minutes 41 seconds east a distance of 166.01 feet to a point
on said Right-of Way Line; thence continuing along said Right-of-
Way Line along a curve to the left an arc distance of 18.12 feet
(said arc being subtended by a chord bearing south 11 degrees 12
minutes 11 seconds east a chord distance of 18.12 feet and having
a radius of 2,964.79 feet) to an iron pin se on said Right-of-Way
Line and at the southeast corner of property now or formerly
owned by Wendy's International, Inc., which iron pin set is the
TRUE POINT OF BEGINNING; FROM THE TRUE POINT OF BEGINNING as thus
established continuing along said Right-of Way Line along a curve
to the left an arc distance of 161.96 feet (said arc being
subtended by a chord bearing south 12 degrees 56 minutes 36
seconds east a chord distance of 161.94 feet and having a radius
of 2,964.79 feet) to an iron pin set on said Right-of Way Line
and at the northeast corner of the property now or formerly owned
by Checkers Restaurant; thence leaving said Right-of-Way Line and
traveling along the northwesterly line of said Checkers property
south 71 degrees 15 minutes 52 seconds west a distance 221.74
feet to an iron pin set; thence traveling north 18 degrees 44
minutes 08 seconds west a distance of 132.30 feet to an iron pin
set; thence traveling north 07 degrees 31 minutes 35 seconds east
a distance of 131.18 feet to an iron pin set at the southwest
corner of said Wendy's property; thence traveling along the
southeasterly line of said Wendy's property south 82 degrees 28
minutes 25 seconds east a distance of 200.76 feet to an iron pin
set, and the TRUE POINT OF BEGINNING.
ALL AS SHOWN on that certain survey for RTM Georgia, Inc.,
prepared by Federer-Ruppert & Associates, bearing the seal of
James W. Woolley, Georgia Registered Land Surveyor Number 1478,
dated January 17, 1994, last revised May 10, 1994.
TOGETHER WITH all rights with respect to the above property
reserved in Limited Warranty Deed form Wilson Financial
Corporation, a Florida Corporation to Wendy's International, Inc.
and Ohio Corporation, dated December 26, 1989, filed for record
December 28, 1989 at 2:01 p.m., recorded in Deed Book 5590, Page
288, Records of Cobb County, Georgia.
TOGETHER WITH all rights with respect to the above property
reserved in that certain Limited Warranty Deed from American
Founders Life Insurance Company, a Texas corporation to Robert G.
Brown, dated June 8, 1992, filed for record June 9, 1992 at 10.21
a.m., recorded in Deed Book 6682, Page 118, aforesaid Records.
TOGETHER WITH all rights with respect to the above property set
forth in Easement Grant by and between Wilson Financial
Corporation, a Florida corporation and Wendy's International,
Inc., an Ohio corporation, dated December 26, 1989, filed for
record December 28, 1989 at 2:01 p.m., recorded in Deed Book
5590, Page 291, aforesaid Records; as amended by that certain
Amendment to Easement Grant, dated June 30, 1993, filed for
record July 1, 1993 at 2:15 p.m., recorded in Deed Book 7448,
Page 421, aforesaid Records.
TOGETHER WITH all rights with respect to the above property set
forth in Easement Agreement by and between American Founders Life
Insurance Company, a Texas corporation and Robert G. Brown, dated
June 8,1 992, filed for record June 9, 1992, at 10:21 a.m.,
recorded in Deed Book 6682, Page 123, aforesaid Records; as
amended by that certain Amendment to Easement Agreement, dated
June 30, 1993, filed for record July 1, 1993 at 2:15 p.m.,
recorded in Deed Book 7448, Page 433, aforesaid Records.
TOGETHER WITH all rights granted in that certain Sign Easement by
and between American Founders Life Insurance Company, a Texas
corporation and RTM Georgia, Inc., dated June 30, 1993, filed for
record July 1, 1993 at 2:15 p.m., recorded in Deed Book 7448,
Page 467, aforesaid Records.
TOGETHER WITH all rights granted in that certain New Driveway
Easement Grant by and between American Founders Life Insurance
Company and RTM Georgia, Inc., dated June 30, 1993, filed for
record July 1, 1993 at 2:15 p.m., recorded in Deed Book 7448,
Page 450, aforesaid Records.
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<ARTICLE> 5
<CIK> 0000894245
<NAME> AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,078,239
<SECURITIES> 0
<RECEIVABLES> 38,182
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,116,421
<PP&E> 20,301,230
<DEPRECIATION> (629,152)
<TOTAL-ASSETS> 20,788,499
<CURRENT-LIABILITIES> 561,156
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0
0
<COMMON> 0
<OTHER-SE> 19,199,590
<TOTAL-LIABILITY-AND-EQUITY> 20,788,499
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<TOTAL-REVENUES> 1,634,170
<CGS> 0
<TOTAL-COSTS> 486,021
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<INCOME-PRETAX> 1,117,667
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<EPS-DILUTED> 46.36
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