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, 1997
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 June 30, 1997 and December 31, 1996
Statements for the Periods ended June 30, 1997 and 1996:
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, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,714,716 $ 2,177,670
Receivables 48,431 95
----------- -----------
Total Current Assets 1,763,147 2,177,765
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 7,238,754 6,809,341
Buildings and Equipment 11,214,549 11,426,434
Construction in Progress 59,241 0
Property Acquisition Costs 56,312 54,410
Accumulated Depreciation (889,208) (710,971)
----------- -----------
Net Investments in Real Estate 17,679,648 17,579,214
----------- -----------
Total Assets $19,442,795 $19,756,979
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 43,673 $ 77,446
Distributions Payable 468,338 468,755
Unearned Rent 14,527 0
----------- -----------
Total Current Liabilities 526,538 546,201
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (17,778) (14,833)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,652 Units outstanding 18,934,035 19,225,611
----------- -----------
Total Partners' Capital 18,916,257 19,210,778
----------- -----------
Total Liabilities and Partners' Capital $19,442,795 $19,756,979
=========== ===========
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
6/30/97 6/30/96 6/30/97 6/30/96
INCOME:
Rent $ 472,339 $ 520,041 $ 949,688 $ 949,016
Investment Income 25,848 40,552 56,589 116,244
---------- ---------- ---------- ----------
Total Income 498,187 560,593 1,006,277 1,065,260
---------- ---------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 70,475 44,083 121,151 110,766
Partnership Administration
and Property Management -
Unrelated Parties 27,888 12,837 50,202 23,944
Depreciation 98,715 100,067 198,441 181,813
---------- ---------- ---------- ----------
Total Expenses 197,078 156,987 369,794 316,523
---------- ---------- ---------- ----------
OPERATING INCOME 301,109 403,606 636,483 748,737
GAIN ON SALE OF REAL ESTATE 2 0 38,694 0
MINORITY INTEREST IN
OPERATING INCOME 0 (22,656) 0 (43,379)
---------- ---------- ---------- ----------
NET INCOME $ 301,111 $ 380,950 $ 675,177 $ 705,358
========== ========== ========== ==========
NET INCOME ALLOCATED:
General Partners $ 3,011 $ 3,809 $ 6,752 $ 7,053
Limited Partners 298,100 377,141 668,425 698,305
---------- ---------- ---------- ----------
$ 301,111 $ 380,950 $ 675,177 $ 705,358
========== ========== ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,652 and 23,869 weighted average
Units outstanding in 1997 and 1996,
respectively) $ 12.60 $ 15.80 $ 28.26 $ 29.26
========== ========== ========== ==========
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)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 675,177 $ 705,358
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 198,441 181,813
Gain on Sale of Real Estate (38,694) 0
Increase in Receivables (48,336) (32,343)
Decrease in Payable to
AEI Fund Management, Inc. (33,773) (17,671)
Increase in Unearned Rent 14,527 34,862
Minority Interest 0 (6,924)
----------- -----------
Total Adjustments 92,165 159,737
----------- -----------
Net Cash Provided By
Operating Activities 767,342 865,095
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (714,900) (3,850,061)
Proceeds from Sale of Real Estate 454,719 0
----------- -----------
Net Cash Used For
Investing Activities (260,181) (3,850,061)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (417) 0
Distributions to Partners (969,698) (969,694)
----------- -----------
Net Cash Used For
Financing Activities (970,115) (969,694)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (462,954) (3,954,660)
CASH AND CASH EQUIVALENTS, beginning of period 2,177,670 4,833,630
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,714,716 $ 878,970
=========== ===========
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, 1995 $ (11,576) $19,548,040 $19,536,464 23,868.50
Distributions (9,697) (959,997) (969,694)
Net Income 7,053 698,305 705,358
---------- ----------- ----------- ----------
BALANCE, June 30, 1996 $ (14,220) $19,286,348 $19,272,128 23,868.50
========== =========== =========== ==========
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
========== =========== =========== ==========
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
JUNE 30, 1997
(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 -
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 for the
Garden Ridge store and Champps, HomeTown Buffet, Arby's/Mrs.
Winner's, Denny's and Applebee's restaurants. The Red Robin
restaurants' 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 years
except for the Denny's restaurants and the Applebee's and
Champps restaurants in Ohio which have renewal options that
may extend the Lease term an additional 15 years and the
Garden Ridge retail store which has renewal options that may
extend the Lease term an additional 25 years. The Leases
contain rent clauses which entitle the Partnership to
receive additional rent in future years based on stated rent
increases. Certain lessees have been granted options to
purchase the property. Depending on the lease, the purchase
price is either determined by a formula, or is the greater
of the fair market value of the property or the amount
determined by a formula. In all cases, if the option were
to be exercised by the lessee, the purchase price would be
greater than the original cost of the property.
The Partnership's properties are all commercial, single-
tenant buildings. The cost of the property and related
accumulated depreciation at June 30, 1997 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
HomeTown Buffet,
Albuquerque, NM $ 241,960 $ 289,371 $ 531,331 $ 36,171
Red Robin,
Colorado Springs, CO 905,980 1,323,210 2,229,190 148,861
Red Robin,
Colorado Springs, CO 721,168 1,034,273 1,755,441 116,356
Arby's/Mrs. Winner's,
Smyrna, GA 201,535 282,301 483,836 30,399
Applebee's, Middletown, OH 330,557 765,405 1,095,962 88,178
Denny's, Burleson, TX 374,721 548,759 923,480 48,737
Applebee's, McAllen, TX 463,553 856,551 1,320,104 84,382
Applebee's, Lafayette, LA 416,197 760,362 1,176,559 66,799
Applebee's, Brownsville, TX 523,042 855,694 1,378,736 61,764
Denny's, Grapevine, TX 722,668 632,053 1,354,721 36,183
Media Play, Apple Valley, MN 425,360 997,341 1,422,701 52,793
Garden Ridge, Pineville, NC 540,354 1,126,738 1,667,092 46,947
Champps, Lyndhurst, OH 717,903 1,742,491 2,460,394 71,638
Champps, Schaumburg, IL 653,756 0 653,756 0
----------- ----------- ----------- -----------
$ 7,238,754 $11,214,549 $18,453,303 $ 889,208
=========== =========== =========== ===========
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On March 28, 1996, the Partnership purchased a 18.50%
interest in a Garden Ridge store in Pineville, North
Carolina for $1,667,092. The property is leased to Garden
Ridge, L.P. under a Lease Agreement with a primary term of
20 years and annual rental payments of $174,319. The
remaining interests in the property are owned by AEI Net
Lease Income & Growth Fund XIX Limited Partnership and AEI
Income & Growth Fund XXI Limited Partnership, affiliates of
the Partnership.
On April 10, 1996, the Partnership purchased a 90.71346%
interest in a Champps Americana restaurant in Lyndhurst,
Ohio for $2,460,394. The property is leased to Americana
Dining Corporation under a Lease Agreement with a primary
term of 20 years and annual rental payments of $258,886.
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.
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. The Partnership 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. reimbursed the
Partnership for all construction advances, accrued interest
and for certain expenses.
On April 21, 1997, the Partnership purchased a 37% 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. The Partnership also
entered into a Development Financing Agreement under which
the Partnership will advance funds to Champps for the
construction of a Champps Americana restaurant on the site.
The Partnership is charging interest on the advances at a
rate of 7.0%. The total purchase price, including the cost
of the land, will be approximately $1,587,000. After the
construction is complete, the Lease Agreement will be
amended to require annual rental payments of approximately
$170,000. 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 June 30, 1997, the Partnership sold 60.9961% of the
Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in four
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $871,086
which resulted in a total net gain of $154,342. The total
cost and related accumulated depreciation of the interests
sold was $756,645 and $39,901, 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)
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 $44,710 which resulted
in a net loss of $28,367. The original cost of the parcel
of land was $73,077. The Partnership believes the state of
Colorado has undervalued the land and is currently
negotiating to receive additional proceeds.
During the first six months of 1997 and the year 1996, the
Partnership distributed net sale proceeds of $65,377 and
$100,570, respectively, to the Limited and General Partners
as part of their regular quarterly distributions which
represented a return of capital of $2.74 and $4.17 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.
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. The remaining interests in the property are owned
by AEI Net Lease Income & Growth Fund XIX Limited
Partnership and AEI Income & Growth Fund XXI Limited
Partnership, affiliates of the Partnership.
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which is equal to
approximately two years' rent. The Partnership's share of
such payment was $264,000. Under the Agreement, MGI
remained in possession of the property and performed all of
its obligations under the net lease agreement through
January 31, 1997 at which time it vacated the property and
made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained
to locate a new tenant for the property.
The Partnership has incurred net costs of $764,398 relating
to the review of potential property acquisitions. Of these
costs, $708,086 have been capitalized and allocated to land,
building and equipment. The remaining costs of $56,312 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, 1997 and 1996, the
Partnership recognized rental income of $949,688 and $949,016,
respectively. During the same periods, the Partnership earned
investment income of $56,589 and $116,244, respectively. This
investment income constituted 6% and 11% of total income for the
six months ended June 30, 1997 and 1996, respectively. The
percentage of total income represented by investment income
declines as proceeds are invested in properties.
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota has recently experienced
financial difficulties and has aggressively been restructuring
its organization. As part of the restructuring, the Partnership
and MGI reached an agreement in December, 1996 in which MGI would
buy out and terminate the Lease Agreement by making a payment of
$800,000, which is equal to approximately two years' rent. The
Partnership's share of such payment was $264,000. Under the
Agreement, MGI remained in possession of the property and
performed all of its obligations under the net lease agreement
through January 31, 1997 at which time it vacated the property
and made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained to
locate a new tenant for the property.
During the six months ended June 30, 1997 and 1996, the
Partnership paid Partnership administration expenses to
affiliated parties of $121,151 and $110,766, 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 $50,202 and $23,944, 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 1997, when compared to 1996, is the result
of expenses incurred in 1997 related to the Media Play situation
discussed above.
As of June 30, 1997, 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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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 March 28, 1996, the Partnership purchased a 18.50%
interest in a Garden Ridge store in Pineville, North Carolina for
$1,667,092. The property is leased to Garden Ridge, L.P. under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $174,319. The remaining interests in the property
are owned by AEI Net Lease Income & Growth Fund XIX Limited
Partnership and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
On April 10, 1996, the Partnership purchased a 90.71346%
interest in a Champps Americana restaurant in Lyndhurst, Ohio for
$2,460,394. The property is leased to Americana Dining
Corporation under a Lease Agreement with a primary term of 20
years and annual rental payments of $258,886. 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.
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. The
Partnership 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. reimbursed the Partnership for
all construction advances, accrued interest and for certain
expenses.
On April 21, 1997, the Partnership purchased a 37%
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. The Partnership also
entered into a Development Financing Agreement under which the
Partnership will advance funds to Champps for the construction of
a Champps Americana restaurant on the site. The Partnership is
charging interest on the advances at a rate of 7.0%. The total
purchase price, including the cost of the land, will be
approximately $1,587,000. After the construction is complete,
the Lease Agreement will be amended to require annual rental
payments of approximately $170,000. 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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through June 30, 1997, the Partnership sold 60.9961% of
the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in four
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $871,086 which
resulted in a total net gain of $154,342. The total cost and
related accumulated depreciation of the interests sold was
$756,645 and $39,901, respectively. For the six months ended
June 30, 1997, the net gain was $67,061.
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 $44,710 which resulted in a net loss of
$28,367. The original cost of the parcel of land was $73,077.
The Partnership believes the state of Colorado has undervalued
the land and is currently negotiating to receive additional
proceeds.
During the first six months of 1997 and the year 1996, the
Partnership distributed net sale proceeds of $65,377 and
$100,570, respectively, to the Limited and General Partners as
part of their regular quarterly distributions which represented a
return of capital of $2.74 and $4.17 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 Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1996, 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.
PART II - OTHER INFORMATION
(Continued)
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
27 Financial Data Schedule for period
ended June 30, 1997.
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: August 5, 1997 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)
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<NAME> AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,714,716
<SECURITIES> 0
<RECEIVABLES> 48,431
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,763,147
<PP&E> 18,568,856
<DEPRECIATION> (889,208)
<TOTAL-ASSETS> 19,442,795
<CURRENT-LIABILITIES> 526,538
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,916,257
<TOTAL-LIABILITY-AND-EQUITY> 19,442,795
<SALES> 0
<TOTAL-REVENUES> 1,006,277
<CGS> 0
<TOTAL-COSTS> 369,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 675,177
<INCOME-TAX> 0
<INCOME-CONTINUING> 675,177
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