SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
Of The Securities Exchange Act Of 1934
For the Fiscal Year Ended: December 31, 1998
Commission file number: 0-23778
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
(Name of Small Business Issuer in its Charter)
State of Minnesota 41-1729121
(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(651) 227-7333
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No
Check if disclosure of delinquent filers in response to Rule 405
of Regulation S-B is not contained in this Form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Issuer's revenues for year ended December 31, 1998 were
$2,038,914.
As of February 28, 1999, there were 23,350.79 Units of limited
partnership interest in the registrant outstanding and owned by
nonaffiliates of the registrant, which Units had an aggregate
market value (based solely on the price at which they were sold
since there is no ready market for such Units) of $23,350,790.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant has not incorporated any documents by reference
into this report.
Transitional Small Business Disclosure Format:
Yes No [X]
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
AEI Net Lease Income & Growth Fund XX Limited Partnership
(the "Partnership" or the "Registrant") is a limited partnership
which was organized pursuant to the laws of the State of
Minnesota on September 2, 1992. The registrant is comprised of
AEI Fund Management XX, Inc. (AFM) as Managing General Partner,
Robert P. Johnson as the Individual General Partner, and
purchasers of partnership units as Limited Partners. The
Partnership offered for sale up to $24,000,000 of limited
partnership interests (the "Units") (24,000 Units at $1,000 per
Unit) pursuant to a registration statement effective January 20,
1993. 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.
The Partnership was organized to acquire existing and
newly constructed commercial properties located in the United
States, to lease such properties to tenants under triple net
leases, to hold such properties and to eventually sell such
properties. From subscription proceeds, the Partnership
purchased fourteen properties, including partial interests in
five properties totaling $20,174,391. The balance of the
subscription proceeds was applied to organization and syndication
costs, working capital reserves and distributions, which
represented a return of capital. The properties are all
commercial, single tenant buildings leased under triple net
leases.
The Partnership's properties were purchased with
subscription proceeds without any indebtedness. The Partnership
will not finance properties in the future to obtain proceeds for
new property acquisitions. If it is required to do so, the
Partnership may incur short-term indebtedness, which may be
secured by a portion of the Partnership's properties, to finance
the day-to-day cash flow requirements of the Partnership
(including cash flow necessary to repurchase Units). The amount
of borrowings that may be secured by the Partnership's properties
is limited in the aggregate to 10% of the purchase price of all
Partnership properties. The Partnership will not incur
borrowings prior to application of the proceeds from sale of the
Units, will not incur borrowings to pay distributions, and will
not incur borrowings while there is cash available for
distributions.
The Partnership will hold its properties until the General
Partners determine that the sale or other disposition of the
properties is advantageous in view of the Partnership's
investment objectives. In deciding whether to sell properties,
the General Partners will consider factors such as potential
appreciation, net cash flow and income tax considerations. In
addition, certain lessees may be granted options to purchase
properties after a specified portion of the lease term has
elapsed. The Partnership expects to sell some or all of its
properties prior to its final liquidation and to reinvest the
proceeds from such sales in additional properties. The
Partnership reserves the right, at the discretion of the General
Partners, to either distribute proceeds from the sale of
properties to the Partners or to reinvest such proceeds in
additional properties, provided that sufficient proceeds are
distributed to the Limited Partners to pay federal and state
income taxes related to any taxable gain recognized as a result
of the sale. It is anticipated that the Partnership will
commence liquidation through the sale of its remaining properties
twelve to fifteen years after its formation, although final
liquidation may be delayed by a number of circumstances,
including market conditions and seller financing of properties.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Leases
Although there are variations in the specific terms of the
leases, the following is a summary of the general terms of the
Partnership's leases. The properties are leased to various
tenants under triple net leases, which are classified as
operating leases. Under a triple net lease, the lessee is
responsible for all real estate taxes, insurance, maintenance,
repairs and operating expenses for the property. The initial
lease terms are for 10 to 20 years. The leases provide for base
annual rental payments, payable in monthly installments, and
contain rent clauses which entitle the Partnership to receive
additional rent in future years based on stated rent increases.
The leases provide the lessees with two to five five-year
renewal options subject to the same terms and conditions as the
initial lease. Certain lessees have been granted options to
purchase the property. Depending on the lease, the purchase
price is either determined by a formula, or is the greater of the
fair market value of the property or the amount determined by a
formula. In all cases, if the option were to be exercised by the
lessee, the purchase price would be greater than the original
cost of the property.
On March 28, 1996, the Partnership purchased a 18.50%
interest in a Garden Ridge retail 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 were purchased 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
interests in the property were purchased by the Individual
General Partner of the Partnership and AEI Institutional Net
Lease Fund '93 Limited Partnership, affiliates of the
Partnership.
On April 21, 1997, the Partnership purchased a 37.0%
interest in a parcel of land in Schaumburg, Illinois for
$653,756. The land is leased to Champps Americana, Inc.
(Champps) under a Lease Agreement with a primary term of 20 years
and annual rental payments of $49,910. Effective October 17,
1997, the annual rent was increased to $76,647. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 7.0%. Effective
October 17, 1997, the interest rate was increased to 10.75%. On
December 31, 1997, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$176,405. The Partnership's share of the total acquisition
costs, including the cost of the land, was $1,676,195. The
remaining interests in the property were purchased by AEI Income
& Growth Fund XXI Limited Partnership and Net Lease Income &
Growth Fund 84-A Limited Partnership, affiliates of the
Partnership.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
On August 11, 1998, the Partnership purchased a 60.0%
interest in a parcel of land in Columbus, Ohio for $621,600. The
land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $43,512. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through December 31, 1998, the Partnership had advanced
$654,272 for the construction of the property and was charging
interest on the advances at a rate of 7.0%. The Partnership's
share of the total purchase price, including the cost of the
land, will be approximately $2,065,000. After the construction
is complete, the Lease Agreement will be amended to require
annual rental payments of approximately $217,000. The remaining
interest in the property is owned by Net Lease Income & Growth
Fund 84-A Limited Partnership.
Through December 31, 1997, the Partnership sold 98.8823%
of the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in
seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,439,965 which
resulted in a total net gain of $284,712. The total cost and
related accumulated depreciation of the interests sold was
$1,226,615 and $71,362, respectively. For the years ended
December 31, 1997 and 1996, the net gain was $197,431 and
$87,281, respectively.
Through December 31, 1998, the Partnership sold 88.04128%
of its interest in the Applebee's restaurant in Middletown, Ohio,
in six separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,322,934 which
resulted in a total net gain of $389,903. The total cost and
related accumulated depreciation of the interests sold was
$1,026,857 and $93,826, respectively. For the years ended
December 31, 1998 and 1997, the net gain was $78,734 and
$311,169.
On January 27, 1998, the Partnership sold 5.50031% of its
interest in the Champps Americana restaurant in Lyndhurst, Ohio
to an unrelated third party. The Partnership received net sale
proceeds of $184,032 which resulted in a net gain of $41,140. At
the time of the sale, the cost and related accumulated
depreciation of the interest sold was $149,183 and $6,291,
respectively.
In May, 1997, the Partnership sold 3,739 square feet of
land from the Red Robin property on Jamboree Drive in Colorado
Springs, Colorado, pursuant to a Right of Way Agreement with the
state of Colorado Department of Transportation. The Partnership
received net proceeds of $37,052 which, in 1997, resulted in a
net loss of $36,025. The original cost of the parcel of land was
$73,077. The Partnership believed the state of Colorado
undervalued the land and successfully negotiated to receive
additional net proceeds of $14,290, which was recognized as a
gain in the first quarter of 1998.
As of December 31, 1997, based on an analysis of market
conditions, it was determined the fair value of the Partnership's
interest in the Media Play retail store was approximately
$726,000. In the fourth quarter of 1997, a charge to operations
for real estate impairment of $626,800 was recognized, which is
the difference between the book value at December 31, 1997 of
$1,352,800 and the estimated market value of $726,000. The
charge was recorded against the cost of the land, building and
equipment.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Major Tenants
During 1998, four of the Partnership's lessees each
contributed more than ten percent of the Partnership's total
rental revenue. The major tenants, in aggregate, contributed 78%
of the Partnership's total rental revenue in 1998. It is
anticipated that, based on the minimum rental payments required
under the leases, each major tenant will continue to contribute
more than ten percent of the Partnership's rental income in 1999
and future years. Any failure of these major tenants could
materially affect the Partnership's net income and cash
distributions.
Competition
The Partnership is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Partnership. At the time the Partnership
elects to dispose of its properties, the Partnership will be in
competition with other persons and entities to find buyers for
its properties.
Employees
The Partnership has no direct employees. Management
services are performed for the Partnership by AEI Fund
Management, Inc., an affiliate of AFM.
Year 2000 Compliance
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
ITEM 2. DESCRIPTION OF PROPERTIES.
Investment Objectives
The Partnership's investment objectives are to acquire
existing or newly-developed commercial properties throughout the
United States that offer the potential for (i) regular cash
distributions of lease income; (ii) growth in lease income
through rent escalation provisions; (iii) preservation of capital
through all-cash sale-leaseback transactions; (iv) capital growth
through appreciation in the value of properties; and (v) stable
property performance through long-term lease contracts. The
Partnership does not have a policy, and there is no limitation,
as to the amount or percentage of assets that may be invested in
any one property. However, to the extent possible, the General
Partners attempt to diversify the type and location of the
Partnership's properties.
Description of Properties
The Partnership's properties are all commercial, single
tenant buildings. The properties were acquired on a debt-free
basis and are leased to various tenants under triple net leases,
which are classified as operating leases. The Partnership holds
an undivided fee simple interest in the properties.
The Partnership's properties are subject to the general
competitive conditions incident to the ownership of single tenant
investment real estate. Since each property is leased under a
long-term lease, there is little competition until the
Partnership decides to sell the property. At this time, the
Partnership will be competing with other real estate owners, on
both a national and local level, in attempting to find buyers for
the properties. In the event of a tenant default, the
Partnership would be competing with other real estate owners, who
have property vacancies, to attract a new tenant to lease the
property. The Partnership's tenants operate in industries that
are very competitive and can be affected by factors such as
changes in regional or local economies, seasonality and changes
in consumer preference.
The following table is a summary of the properties that
the Partnership acquired and owned as of December 31, 1998.
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
HomeTown
Buffet Restaurant
Albuquerque, NM Summit Family
(40.1354%) 9/30/93 $ 531,331 Restaurants, Inc. $ 71,090 $ 18.45
Red Robin Restaurant The Snyder
Colorado Springs, CO 2/24/94 $2,229,190 Group Company $ 284,364 $ 39.06
Red Robin Restaurant The Snyder
Colorado Springs, CO 2/24/94 $1,755,441 Group Company $ 209,209 $ 28.88
Arby's/Mrs. Winner's
Restaurant
Smyrna, GA RTM
(1.1177%) 5/16/94 $ 13,865 Georgia, Inc. $ 1,635 $ 36.23
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
Applebee's Restaurant
Middletown, OH Thomas &
(5.925%) 7/15/94 $ 69,106 King, Inc. $ 8,255 $ 25.57
Huntington
Denny's Restaurant Restaurants
Burleson, TX 12/6/94 $ 923,480 Group, Inc. $ 106,019 $ 22.18
Renaissant
Applebee's Restaurant Development
McAllen, TX 12/8/94 $1,320,104 Corporation $ 158,355 $ 29.40
Applebee's Restaurant Gulf Coast
Lafayette, LA 1/17/95 $1,176,559 Restaurants, Inc. $ 160,684 $ 29.58
Renaissant
Applebee's Restaurant Development
Brownsville, TX 8/31/95 $1,378,736 Corporation $ 163,944 $ 26.93
Huntington
Denny's Restaurant Restaurants
Grapevine, TX 11/21/95 $1,354,721 Group, Inc. $ 150,333 $ 30.41
Media Play Retail Store
Apple Valley, MN
(33.0%) 12/21/95 $1,422,701 (1)
Garden Ridge Retail Store
Pineville, NC Garden
(18.50%) 3/28/96 $1,667,092 Ridge L.P. $ 174,319 $ 6.65
Champps
Americana Restaurant
Lyndhurst, OH Americana Dining
(85.21315%) 4/10/96 $2,311,211 Corporation $ 243,189 $ 34.93
Champps
Americana Restaurant
Schaumburg, IL Champps
(37.0%) 12/31/97 $1,676,195 Americana, Inc. $ 176,405 $ 42.73
</TABLE>
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
<TABLE>
<CAPTION>
Total Property
Purchase Acquisition Annual Lease Annual Rent
Property Date Costs Lessee Payment Per Sq. Ft.
<S> <C> <C> <C> <C> <C>
Champps
Americana Restaurant
Columbus, OH Americana
(60.0%) Dining
(land only) (2) 8/11/98 $ 621,600 Corporation $ 43,512 $ 6.62
</TABLE>
(1) The property was vacated on January 31, 1997 and listed
for sale or lease.
(2) The restaurant was under construction as of December 31,
1998.
The properties listed above with a partial ownership
percentage are owned with affiliates of the Partnership or
unrelated third parties. The remaining interests in the Media
Play and Garden Ridge retail stores are owned by AEI Net Lease
Income & Growth Fund XIX Limited Partnership and AEI Income &
Growth Fund XXI Limited Partnership. The remaining interests in
the Champps Americana restaurant in Schaumburg, Illinois, are
owned by AEI Income & Growth Fund XXI Limited Partnership and Net
Lease Income & Growth Fund 84-A Limited Partnership. The
remaining interests in the Champps Americana in Lyndhurst, Ohio,
Applebee's in Middletown, Ohio, HomeTown Buffet and Arby's/Mrs.
Winner's restaurants are owned by unrelated third parties. The
remaining interest in the Champps Americana restaurant in
Columbus, Ohio, is owned by Net Lease Income & Growth Fund 84-A
Limited Partnership.
The Partnership accounts for properties owned as tenants-
in-common with affiliated Partnerships and/or unrelated third
parties using the proportionate consolidation method. Each
tenant-in-common owns a separate, undivided interest in the
properties. Any tenant-in-common that holds more than a 50%
interest does not control decisions over the other tenant-in-
common interests. The financial statements reflect only this
Partnership's percentage share of the properties' land, building
and equipment, liabilities, revenues and expenses.
The initial Lease terms are 20 years except for the Red
Robin restaurants, which have Lease Agreements that expire on
November 30, 2004, and December 31, 2007, and the Media Play
retail store. The Leases contain renewal options which may
extend the Lease term an additional 10 years except for the
Denny's and Champps Americana restaurants and the Applebee's
restaurants in Ohio and Louisiana 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.
Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The General Partners believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
For tax purposes, the Partnership's properties are
depreciated under the Modified Accelerated Cost Recovery System
(MACRS). The largest depreciable component of a property is the
building which is depreciated, using the straight-line method,
over 40 years. The remaining depreciable components of a
property are personal property and land improvements which are
depreciated, using an accelerated method, over 5 and 15 years,
respectively. Since the Partnership has tax-exempt Partners, the
Partnership is subject to the rules of Section 168(h)(6) of the
Internal Revenue Code which requires a percentage of the
properties' depreciable components to be depreciated over longer
lives using the straight-line method. In general the federal tax
basis of the properties for tax depreciation purposes is the same
as the basis for book depreciation purposes except for properties
whose book value was reduced by a real estate impairment loss
pursuant to Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." The real estate impairment
loss, which was recorded against the book cost of the land and
depreciable property, was not recognized for tax purposes.
Through December 31, 1998, all properties were 100 percent
occupied by the lessees, except the Media Play retail store which
has been 100% vacant since January 31, 1997.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS.
As of December 31, 1998, there were 1,603 holders of
record of the registrant's Limited Partnership Units. There is
no other class of security outstanding or authorized. The
registrant's Units are not a traded security in any market.
However, the Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1998, the Partnership did not redeem any Units from
the Limited Partners. In prior years, a total of thirty-seven
Limited Partners redeemed 614.9 Partnership Units for $541,983 in
accordance with the Partnership Agreement. The redemptions
increase the remaining Limited Partners' ownership interest in
the Partnership.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS. (Continued)
Cash distributions of $17,575 and $18,427 were made to the
General Partners and $1,740,002 and $1,594,801 were made to the
Limited Partners in 1998 and 1997, respectively. The
distributions were made on a quarterly basis and represent Net
Cash Flow, as defined, except as discussed below. These
distributions should not be compared with dividends paid on
capital stock by corporations.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $77,261 and $122,770 of
proceeds from property sales in 1998 and 1997, respectively.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
For the years ended December 31, 1998 and 1997, the
Partnership recognized rental income of $1,910,372 and
$1,880,720, respectively. During the same periods, the
Partnership earned investment income of $128,542 and $123,172,
respectively. In 1998, rental income increased as a result of
additional rent received from two property acquisitions in 1997
and 1998 and rent increases on seven properties. These increases
were offset by the property sales and the restructuring of the
Media Play property discussed below.
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota experienced financial
difficulties and was aggressively restructuring its organization.
As part of the restructuring, the Partnership and MGI reached an
agreement in December, 1996 in which MGI would buy out and
terminate the Lease Agreement by making a payment of $800,000,
which is equal to approximately two years' rent. The
Partnership's share of such payment was $264,000. Under the
Agreement, MGI remained in possession of the property and
performed all of its obligations under the net lease agreement
through January 31, 1997 at which time it vacated the property
and made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained to
locate a new tenant for the property.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Partnership's interest in the Media Play was approximately
$726,000. In the fourth quarter of 1997, a charge to operations
for real estate impairment of $626,800 was recognized, which is
the difference between the book value at December 31, 1997 of
$1,352,800 and the estimated market value of $726,000. The
charge was recorded against the cost of the land, building and
equipment.
During the years ended December 31, 1998 and 1997, the
Partnership paid Partnership administration expenses to
affiliated parties of $251,774 and $247,842, 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 $102,441 and $106,712, 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
As of December 31, 1998, the Partnership's cash
distribution rate was 7.25% on an annualized basis.
Distributions of Net Cash Flow to the General Partners were
subordinated to the Limited Partners as required in the
Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. The Leases contain cost of living increases which
will result in an increase in rental income over the term of the
Leases. Inflation also may cause the Partnership's real estate
to appreciate in value. However, inflation and changing prices
may also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
Liquidity and Capital Resources
During 1998, the Partnership's cash balances decreased
$704,723 as a result of cash used to purchase additional
properties which was partially offset by cash generated from the
sale of property and cash generated from operating activities in
excess of distributions. Net cash provided by operating
activities increased from $1,604,421 in 1997 to $1,689,142 in
1998 mainly as a result of an increase in income in 1998 and net
timing differences in the collection of payments from the lessees
and the payment of expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. In 1998 and 1997, the Partnership
generated cash flow from the sale of real estate of $438,215 and
$2,098,981, respectively. During the same periods, the
Partnership expended $1,304,177 and $1,651,992, respectively, to
invest in real properties (inclusive of acquisition expenses), as
the Partnership continued to reinvest the cash generated from the
property sales.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On April 21, 1997, the Partnership purchased a 37.0%
interest in a parcel of land in Schaumburg, Illinois for
$653,756. The land is leased to Champps Americana, Inc.
(Champps) under a Lease Agreement with a primary term of 20 years
and annual rental payments of $49,910. Effective October 17,
1997, the annual rent was increased to $76,647. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 7.0%. Effective
October 17, 1997, the interest rate was increased to 10.75%. On
December 31, 1997, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$176,405. The Partnership's share of the total acquisition
costs, including the cost of the land, was $1,676,195. The
remaining interests in the property were purchased by AEI Income
& Growth Fund XXI Limited Partnership and Net Lease Income &
Growth Fund 84-A Limited Partnership, affiliates of the
Partnership.
On August 11, 1998, the Partnership purchased a 60.0%
interest in a parcel of land in Columbus, Ohio for $621,600. The
land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $43,512. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through December 31, 1998, the Partnership had advanced
$654,272 for the construction of the property and was charging
interest on the advances at a rate of 7.0%. The Partnership's
share of the total purchase price, including the cost of the
land, will be approximately $2,065,000. After the construction
is complete, the Lease Agreement will be amended to require
annual rental payments of approximately $217,000. The remaining
interest in the property is owned by Net Lease Income & Growth
Fund 84-A Limited Partnership.
Through December 31, 1997, the Partnership sold 98.8823%
of the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in
seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,439,965 which
resulted in a total net gain of $284,712. The total cost and
related accumulated depreciation of the interests sold was
$1,226,615 and $71,362, respectively. For the year ended
December 31, 1997, the net gain was $197,431.
Through December 31, 1998, the Partnership sold 88.04128%
of its interest in the Applebee's restaurant in Middletown, Ohio,
in six separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,322,934 which
resulted in a total net gain of $389,903. The total cost and
related accumulated depreciation of the interests sold was
$1,026,857 and $93,826, respectively. For the years ended
December 31, 1998 and 1997, the net gain was $78,734 and
$311,169.
On January 27, 1998, the Partnership sold 5.50031% of its
interest in the Champps Americana restaurant in Lyndhurst, Ohio
to an unrelated third party. The Partnership received net sale
proceeds of $184,032 which resulted in a net gain of $41,140. At
the time of the sale, the cost and related accumulated
depreciation of the interest sold was $149,183 and $6,291,
respectively.
The Partnership owns a 40.1354% interest in the HomeTown
Buffet restaurant in Albuquerque, New Mexico. Prior to 1996, the
Partnership sold 59.8646% of the property to unrelated third
parties, who own the property with the Partnership as tenants-in-
common.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (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 $37,052 which, in 1997, resulted in a
net loss of $36,025. The original cost of the parcel of land was
$73,077. The Partnership believed the state of Colorado
undervalued the land and successfully negotiated to receive
additional net proceeds of $14,290, which was recognized as a
gain in the first quarter of 1998.
During 1998 and 1997, the Partnership distributed $78,041
and $124,011 of the net sale proceeds to the Limited and General
Partners as part of their regular quarterly distributions which
represented a return of capital of $3.31 and $5.20 per Limited
Partnership Unit, respectively. The remaining net sale proceeds
will either be re-invested in additional properties or
distributed to the Partners in the future.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first week after the end
of each quarter. The Partnership attempts to maintain a stable
distribution rate from quarter to quarter. Redemption payments
are paid to redeeming Partners in the fourth quarter of each
year. The redemption payments generally are funded with cash
that would normally be paid as part of the regular quarterly
distributions. As a result, total distributions and
distributions payable fluctuate from year to year due to cash
used to fund redemption payments. Effective July 1, 1997, the
Partnership's distribution rate was reduced from 8.0% to 7.25%.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1998, the Partnership did not redeem any Units from
the Limited Partners. In prior years, a total of thirty-seven
Limited Partners redeemed 614.9 Partnership Units for $541,983 in
accordance with the Partnership Agreement. The redemptions
increase the remaining Limited Partners' ownership interest in
the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis
contains various "forward looking statements" within the meaning
of federal securities laws which represent management's
expectations or beliefs concerning future events, including
statements regarding anticipated application of cash, expected
returns from rental income, growth in revenue, taxation levels,
the sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward
looking statements made by the Partnership, must be evaluated in
the context of a number of factors that may affect the
Partnership's financial condition and results of operations,
including the following:
<BULLET> Market and economic conditions which affect
the value of the properties the Partnership owns and
the cash from rental income such properties
generate;
<BULLET> the federal income tax consequences of rental
income, deductions, gain on sales and other items and
the affects of these consequences for investors;
<BULLET> resolution by the General Partners of
conflicts with which they may be confronted;
<BULLET> the success of the General Partners of
locating properties with favorable risk return
characteristics;
<BULLET> the effect of tenant defaults; and
<BULLET> the condition of the industries in which the
tenants of properties owned by the Partnership
operate.
ITEM 7. FINANCIAL STATEMENTS.
See accompanying index to financial statements.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors
Balance Sheet as of December 31, 1998 and 1997
Statements for the Years Ended December 31, 1998 and 1997:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
REPORT OF INDEPENDENT AUDITORS
To the Partners:
AEI Net Lease Income & Growth Fund XX Limited Partnership
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI NET
LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP (a Minnesota
limited partnership) as of December 31, 1998 and 1997 and the
related statements of income, cash flows and changes in partners'
capital for the years then ended. These financial statements are
the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of AEI Net Lease Income & Growth Fund XX Limited Partnership as
of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Minneapolis, Minnesota /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 27, 1999 Boulay, Heutmaker, Zibell & Co. P.L.L.P.
Certified Public Accountants
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,407,691 $ 2,112,414
Receivables 47,792 65,985
----------- -----------
Total Current Assets 1,455,483 2,178,399
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 7,175,132 6,650,715
Buildings and Equipment 10,649,400 10,879,290
Construction in Progress 654,272 0
Property Acquisition Costs 58,511 30,207
Accumulated Depreciation (1,320,192) (972,278)
----------- -----------
Net Investments in Real Estate 17,217,123 16,587,934
----------- -----------
Total Assets $18,672,606 $18,766,333
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 84,669 $ 98,419
Distributions Payable 424,509 194,835
----------- -----------
Total Current Liabilities 509,178 293,254
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (25,306) (22,210)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,385 Units outstanding in 1998 and 1997 18,188,734 18,495,289
----------- -----------
Total Partners' Capital 18,163,428 18,473,079
----------- -----------
Total Liabilities and Partners' Capital $18,672,606 $18,766,333
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31
1998 1997
INCOME:
Rent $ 1,910,372 $ 1,880,720
Investment Income 128,542 123,172
----------- -----------
Total Income 2,038,914 2,003,892
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 251,774 247,842
Partnership Administration and Property
Management - Unrelated Parties 102,441 106,712
Depreciation 370,937 390,066
Real Estate Impairment 0 626,800
----------- -----------
Total Expenses 725,152 1,371,420
----------- -----------
OPERATING INCOME 1,313,762 632,472
GAIN ON SALE OF REAL ESTATE 134,164 472,575
----------- -----------
NET INCOME $ 1,447,926 $ 1,105,047
=========== ===========
NET INCOME ALLOCATED:
General Partners 14,479 11,050
Limited Partners 1,433,447 1,093,997
----------- -----------
$ 1,447,926 $ 1,105,047
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(23,385 and 23,585 weighted average Units
outstanding in 1998 and 1997, respectively) $ 61.30 $ 46.39
=========== ===========
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 YEARS ENDED DECEMBER 31
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,447,926 $ 1,105,047
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 370,937 390,066
Real Estate Impairment 0 626,800
Gain on Sale of Real Estate (134,164) (472,575)
(Increase) Decrease in Receivables 18,193 (65,890)
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (13,750) 20,973
----------- -----------
Total Adjustments 241,216 499,374
----------- -----------
Net Cash Provided By
Operating Activities 1,689,142 1,604,421
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,304,177) (1,651,992)
Proceeds From Sale of Real Estate 438,215 2,098,981
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (865,962) 446,989
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable 229,674 (273,920)
Distributions to Partners (1,757,577) (1,610,910)
Redemption Payments 0 (231,836)
----------- -----------
Net Cash Used For
Financing Activities (1,527,903) (2,116,666)
----------- -----------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (704,723) (65,256)
CASH AND CASH EQUIVALENTS, beginning of period 2,112,414 2,177,670
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,407,691 $ 2,112,414
=========== ===========
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 YEARS ENDED DECEMBER 31
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ (14,833) $19,225,611 $19,210,778 23,652.30
Distributions (16,109) (1,594,801) (1,610,910)
Redemption Payments (2,318) (229,518) (231,836) (267.21)
Net Income 11,050 1,093,997 1,105,047
---------- ----------- ----------- ----------
BALANCE, December 31, 1997 (22,210) 18,495,289 18,473,079 23,385.09
Distributions (17,575) (1,740,002) (1,757,577)
Net Income 14,479 1,433,447 1,447,926
---------- ----------- ----------- ----------
BALANCE, December 31, 1998 $ (25,306) $18,188,734 $18,163,428 23,385.09
========== =========== =========== ==========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) 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.
(AEI), performs the administrative and operating functions
for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on 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.
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.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) Organization - (Continued)
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 12% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% to the General Partners.
Losses will be allocated 98% to the Limited Partners and 2%
to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
(2) Summary of Significant Accounting Policies -
Financial Statement Presentation
The accounts of the Partnership are maintained on the
accrual basis of accounting for both federal income tax
purposes and financial reporting purposes.
Accounting Estimates
Management uses estimates and assumptions in preparing
these financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions may affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.
The Partnership regularly assesses whether market events
and conditions indicate that it is reasonably possible to
recover the carrying amounts of its investments in real
estate from future operations and sales. A change in
those market events and conditions could have a material
effect on the carrying amount of its real estate
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(2) Summary of Significant Accounting Policies - (Continued)
Cash Concentrations of Credit Risk
At times throughout the year, the Partnership's cash
deposited in financial institutions may exceed FDIC
insurance limits.
Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents may include cash in checking, cash invested
in money market accounts, certificates of deposit,
federal agency notes and commercial paper with a term of
three months or less.
Income Taxes
The income or loss of the Partnership for federal income
tax reporting purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has
been given to income taxes in the accompanying financial
statements.
The tax return, the qualification of the Partnership as
such for tax purposes, and the amount of distributable
Partnership income or loss are subject to examination by
federal and state taxing authorities. If such an
examination results in changes with respect to the
Partnership qualification or in changes to distributable
Partnership income or loss, the taxable income of the
partners would be adjusted accordingly.
Real Estate
The Partnership's real estate is leased under triple net
leases classified as operating leases. The Partnership
recognizes rental revenue on the accrual basis according
to the terms of the individual leases. For leases which
contain cost of living increases, the increases are
recognized in the year in which they are effective.
Real estate is recorded at the lower of cost or estimated
net realizable value. The Partnership compares the
carrying amount of its properties to the estimated future
cash flows expected to result from the property and its
eventual disposition. If the sum of the expected future
cash flows is less than the carrying amount of the
property, the Partnership recognizes an impairment loss
by the amount by which the carrying amount of the
property exceeds the fair value of the property.
The Partnership has capitalized as Investments in Real
Estate certain costs incurred in the review and
acquisition of the properties. The costs were allocated
to the land, buildings and equipment.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(2) Summary of Significant Accounting Policies - (Continued)
The buildings and equipment of the Partnership are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 30
years and 10 years, respectively.
The Partnership accounts for properties owned as tenants-
in-common with affiliated Partnerships and/or unrelated
third parties using the proportionate consolidation
method. Each tenant-in-common owns a separate, undivided
interest in the properties. Any tenant-in-common that
holds more than a 50% interest does not control decisions
over the other tenant-in-common interests. The financial
statements reflect only this Partnership's percentage
share of the properties' land, building and equipment,
liabilities, revenues and expenses.
(3) Related Party Transactions -
The Partnership owns a 33.0% interest in a Media Play retail
store and an 18.5% interest in a Garden Ridge retail store.
The remaining interests in these properties are owned by AEI
Net Lease Income & Growth Fund XIX Limited Partnership and
AEI Income & Growth Fund XXI Limited Partnership, affiliates
of the Partnership. The Partnership owns a 37.0% interest
in a Champps Americana restaurant in Schaumburg, Illinois.
The remaining interests in this 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. The Partnership owns a 60.0% interest in a
Champps Americana restaurant being constructed in Columbus,
Ohio. The remaining interest in this property is owned by
Net Lease Income & Growth Fund 84-A Limited Partnership. As
of December 31, 1998, the Partnership owns a 5.925% interest
in an Applebee's restaurant in Middletown, Ohio. The
remaining interests in this property are owned by unrelated
third parties. AEI Institutional Net Lease Fund '93 Limited
Partnership, an affiliate of the Partnership, owned a
6.03372% interest in this property until September 30, 1997
when the interest was sold to an unrelated third party. As
of December 31, 1998, the Partnership owns an 85.21315%
interest in a Champps Americana restaurant in Lyndhurst,
Ohio. The remaining interests in this property are owned by
unrelated third parties. AEI Institutional Net Lease Fund
'93 Limited Partnership owned a 4.57256% interest in this
property until January 27, 1998 when its interest was sold
to an unrelated third party. The Individual General Partner
of the Partnership owned a 4.71398% interest in this
property until January 20, 1998 when his interest was sold
to an unrelated third party.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(3) Related Party Transactions - (Continued)
AEI and AFM received the following compensation and
reimbursements for costs and expenses from the Partnership:
Total Incurred by the Partnership
for the Years Ended December 31
1998 1997
a.AEI and AFM are reimbursed for all costs
incurred in connection with managing the
Partnership's operations, maintaining the
Partnership's books and communicating
the results of operations to the Limited
Partners. $ 251,774 $ 247,842
======== ========
b.AEI and AFM are reimbursed for all direct
expenses they have paid on the Partnership's
behalf to third parties. These expenses included
printing costs, legal and filing fees, direct
administrative costs, outside audit and
accounting costs, taxes, insurance and
other property costs. $ 102,441 $ 106,712
======== ========
c.AEI is reimbursed for all property acquisition
costs incurred by it in acquiring properties on
behalf of the Partnership. The amounts
are net of financing and commitment fees
and expense reimbursements received by the
Partnership from the lessees in the amount
of $30,371 and $24,720 for 1998 and
1997, respectively. $ 28,305 $ 11,012
======== ========
The payable to AEI Fund Management, Inc. represents the
balance due for the services described in 3a, b and c. This
balance is non-interest bearing and unsecured and is to be
paid in the normal course of business.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate -
The Partnership leases its properties to various tenants
through triple net leases, which are classified as operating
leases. Under a triple net lease, the lessee is responsible
for all real estate taxes, insurance, maintenance, repairs
and operating expenses of the property. The initial Lease
terms are 20 years except for the Red Robin restaurants,
which have Lease Agreements that expire on November 30,
2004, and December 31, 2007, and the Media Play retail store
discussed below. The Leases contain renewal options which
may extend the Lease term an additional 10 years except for
the Denny's and Champps Americana restaurants and the
Applebee's restaurants in Ohio and Louisiana 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 HomeTown Buffet restaurant was
constructed and acquired in 1993. The Red Robin
restaurants, which were constructed in 1984 and 1987, were
acquired in 1994. The Garden Ridge retail store and Champps
Americana restaurant in Lyndhurst, Ohio were constructed and
acquired in 1996. The Champps Americana restaurant in
Illinois was constructed and acquired in 1997. The land for
the Champps Americana restaurant in Columbus, Ohio was
acquired in 1998 and construction of the restaurant will be
completed in 1999. The remaining properties were
constructed and acquired in either 1994 or 1995. There have
been no costs capitalized as improvements subsequent to the
acquisitions.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
The cost of the property and related accumulated
depreciation at December 31, 1998 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
HomeTown Buffet,
Albuquerque, NM $ 241,960 $ 289,371 $ 531,331 $ 50,640
Red Robin,
Colorado Springs, CO 905,980 1,323,210 2,229,190 215,022
Red Robin,
Colorado Springs, CO 721,168 1,034,273 1,755,441 168,069
Arby's/Mrs. Winner's,
Smyrna, GA 5,775 8,090 13,865 1,283
Applebee's, Middletown, OH 20,844 48,262 69,106 8,379
Denny's, Burleson, TX 374,721 548,759 923,480 77,500
Applebee's, McAllen, TX 463,553 856,551 1,320,104 134,181
Applebee's, Lafayette, LA 416,197 760,362 1,176,559 107,557
Applebee's, Brownsville, TX 523,042 855,694 1,378,736 112,298
Denny's, Grapevine, TX 722,668 632,053 1,354,721 69,582
Media Play, Apple Valley, MN 230,304 565,597 795,901 87,644
Garden Ridge, Pineville, NC 540,354 1,126,738 1,667,092 103,284
Champps Americana,
Lyndhurst, OH 674,374 1,636,837 2,311,211 150,833
Champps Americana,
Schaumburg, IL 712,592 963,603 1,676,195 33,920
Champps Americana
Columbus, OH 621,600 0 621,600 0
----------- ---------- ----------- -----------
$ 7,175,132 $10,649,400 $17,824,532 $ 1,320,192
=========== ========== =========== ===========
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.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which was equal
to approximately two years' rent. The Partnership's share
of such payment was $264,000. Under the Agreement, MGI
remained in possession of the property and performed all of
its obligations under the net lease agreement through
January 31, 1997 at which time it vacated the property and
made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained
to locate a new tenant for the property.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Partnership's interest in the Media Play was
approximately $726,000. In the fourth quarter of 1997, a
charge to operations for real estate impairment of $626,800
was recognized, which is the difference between the book
value at December 31, 1997 of $1,352,800 and the estimated
market value of $726,000. The charge was recorded against
the cost of the land, building and equipment.
On April 21, 1997, the Partnership purchased a 37.0%
interest in a parcel of land in Schaumburg, Illinois for
$653,756. The land is leased to Champps Americana, Inc.
(Champps) under a Lease Agreement with a primary term of 20
years and annual rental payments of $49,910. Effective
October 17, 1997, the annual rent was increased to $76,647.
Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership advanced funds to Champps for
the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective October 17, 1997, the
interest rate was increased to 10.75%. On December 31,
1997, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$176,405. The Partnership's share of the total acquisition
costs, including the cost of the land, was $1,676,195.
On August 11, 1998, the Partnership purchased a 60.0%
interest in a parcel of land in Columbus, Ohio for $621,600.
The land is leased to Americana Dining Corporation (ADC)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $43,512. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
will advance funds to ADC for the construction of a Champps
Americana restaurant on the site. Through December 31,
1998, the Partnership had advanced $654,272 for the
construction of the property and was charging interest on
the advances at a rate of 7.0%. The Partnership's share of
the total purchase price, including the cost of the land,
will be approximately $2,065,000. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $217,000.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
Through December 31, 1997, the Partnership sold 98.8823% of
the Arby's/Mrs. Winner's restaurant in Smyrna, Georgia, in
seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,439,965
which resulted in a total net gain of $284,712. The total
cost and related accumulated depreciation of the interests
sold was $1,226,615 and $71,362, respectively. For the year
ended December 31, 1997, the net gain was $197,431.
Through December 31, 1998, the Partnership sold 88.04128% of
its interest in the Applebee's restaurant in Middletown,
Ohio, in six separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,322,934 which resulted in a total net gain of
$389,903. The total cost and related accumulated
depreciation of the interests sold was $1,026,857 and
$93,826, respectively. For the years ended December 31,
1998 and 1997, the net gain was $78,734 and $311,169.
On January 27, 1998, the Partnership sold 5.50031% of its
interest in the Champps Americana restaurant in Lyndhurst,
Ohio to an unrelated third party. The Partnership received
net sale proceeds of $184,032 which resulted in a net gain
of $41,140. At the time of the sale, the cost and related
accumulated depreciation of the interest sold was $149,183
and $6,291, respectively.
The Partnership owns a 40.1354% interest in the HomeTown
Buffet restaurant in Albuquerque, New Mexico. Prior to
1996, the Partnership sold 59.8646% of the property to
unrelated third parties, who own the property with the
Partnership as tenants-in-common.
In May, 1997, the Partnership sold 3,739 square feet of land
from the Red Robin property on Jamboree Drive in Colorado
Springs, Colorado, pursuant to a Right of Way Agreement with
the state of Colorado Department of Transportation. The
Partnership received net proceeds of $37,052 which, in 1997,
resulted in a net loss of $36,025. The original cost of the
parcel of land was $73,077. The Partnership believed the
state of Colorado undervalued the land and successfully
negotiated to receive additional net proceeds of $14,290,
which was recognized as a gain in the first quarter of 1998.
During 1998 and 1997, the Partnership distributed $78,041
and $124,011 of the net sale proceeds to the Limited and
General Partners as part of their regular quarterly
distributions which represented a return of capital of $3.31
and $5.20 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.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(4) Investments in Real Estate - (Continued)
The Partnership has incurred net costs of $801,812 relating
to the review of potential property acquisitions. Of these
costs, $743,301 have been capitalized and allocated to land,
building and equipment. The remaining costs of $58,511 have
been capitalized and will be allocated to properties
acquired subsequent to December 31, 1998.
The minimum future rentals on the Leases for years
subsequent to December 31, 1998 are as follows:
1999 $ 1,972,701
2000 1,999,797
2001 2,033,693
2002 2,073,868
2003 2,103,185
Thereafter 22,663,516
-----------
$32,846,760
===========
There were no contingent rents recognized in 1998 or 1997.
(5) Major Tenants -
The following schedule presents rent revenue from individual
tenants, or affiliated groups of tenants, who each
contributed more than ten percent of the Partnership's total
rent revenue for the years ended December 31:
1998 1997
Tenants Industry
The Snyder Group Company Restaurant $ 488,895 $ 463,454
Champps Americana Group Restaurant 437,652 299,554
Renaissant Development
Corporation Restaurant 314,203 298,425
Huntington Restaurants
Group, Inc. Restaurant 253,749 248,957
---------- ----------
Aggregate rent revenue of major tenants $1,494,499 $1,310,390
========== ==========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 78% 70%
========== ==========
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(6) Partners' Capital -
Cash distributions of $17,575 and $18,427 were made to the
General Partners and $1,740,002 and $1,594,801 were made to
the Limited Partners for the years ended December 31, 1998
and 1997, respectively. The Limited Partners' distributions
represent $74.41 and $67.62 per Limited Partnership Unit
outstanding using 23,385 and 23,585 weighted average Units
in 1998 and 1997, respectively. The distributions represent
$61.30 and $36.58 per Unit of Net Income and $13.11 and
$31.04 per Unit of return of contributed capital in 1998 and
1997, respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $77,261 and $122,770 of
proceeds from property sales in 1998 and 1997, respectively.
Distributions of Net Cash Flow to the General Partners
during 1998 and 1997 were subordinated to the Limited
Partners as required in the Partnership Agreement. As a
result, 99% of distributions and income were allocated to
the Limited Partners and 1% to the General Partners.
The Partnership may acquire Units from Limited Partners who
have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated
to purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall
the Partnership be obligated to purchase Units if, in the
sole discretion of the Managing General Partner, such
purchase would impair the capital or operation of the
Partnership.
During 1998, the Partnership did not redeem any Units from
the Limited Partners. In 1997, sixteen Limited Partners
redeemed a total of 267.2 Partnership Units for $229,518.
The Partnership acquired these Units using Net Cash Flow
from operations. The redemptions increase the remaining
Limited Partners' ownership interest in the Partnership.
After the effect of redemptions, the Adjusted Capital
Contribution, as defined in the Partnership Agreement, is
$1,026.29 per original $1,000 invested.
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(7) Income Taxes -
The following is a reconciliation of net income for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
1998 1997
Net Income for Financial
Reporting Purposes $1,447,926 $1,105,047
Depreciation for Tax Purposes
Under Depreciation for Financial
Reporting Purposes 62,712 76,148
Amortization of Start-Up and
Organization Costs (61,015) (61,124)
Real Estate Impairment Loss
Not Recognized for Tax Purposes 0 626,800
Gain on Sale of Real Estate for
Tax Purposes Under Gain for
Financial Reporting Purposes (222) (3,387)
---------- ----------
Taxable Income to Partners $1,449,401 $1,743,484
========== ==========
AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(7) Income Taxes - (Continued)
The following is a reconciliation of Partners' capital for
financial reporting purposes to Partners' capital reported
for federal income tax purposes for the years ended December
31:
1998 1997
Partners' Capital for
Financial Reporting Purposes $18,163,428 $18,473,079
Adjusted Tax Basis of Investments
in Real Estate Over Net Investments
in Real Estate for Financial
Reporting Purposes 831,412 768,923
Capitalized Start-Up Costs
Under Section 195 303,182 303,182
Amortization of Start-Up and
Organization Costs (221,349) (160,334)
Organization and Syndication Costs
Treated as Reduction of Capital
for Financial Reporting Purposes 3,277,273 3,277,272
----------- -----------
Partners' Capital for
Tax Reporting Purposes $22,353,946 $22,662,122
=========== ===========
(8) Fair Value of Financial Instruments -
The estimated fair values of the financial instruments, none
of which are held for trading purposes, are as follows at
December 31:
1998 1997
Carrying Fair Carrying Fair
Amount Value Amount Value
Cash $ 269 $ 269 $ 400 $ 400
Money Market Funds 1,407,422 1,407,422 2,112,014 2,112,014
--------- --------- --------- ---------
Total Cash and
Cash Equivalents $1,407,691 $1,407,691 $2,112,414 $2,112,414
========= ========= ========= =========
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The registrant is a limited partnership and has no
officers, directors, or direct employees. The General Partners
of the registrant are Robert P. Johnson and AFM. The General
Partners manage and control the Partnership's affairs and have
general responsibility and the ultimate authority in all matters
affecting the Partnership's business. The director and officers
of AFM are as follows:
Robert P. Johnson, age 54, is Chief Executive Officer,
President and Director and has held these positions since the
formation of AFM in September, 1992, and has been elected to
continue in these positions until December, 1999. From 1970 to
the present, he had been employed exclusively in the investment
industry, specializing in tax-advantaged limited partnership
investments. In that capacity, he has been involved in the
development, analysis, marketing and management of public and
private investment programs investing in net lease properties as
well as public and private investment programs investing in
energy development. Since 1971, Mr. Johnson has been the
president, a director and a registered principal of AEI
Securities, Inc. (formerly AEI Incorporated), which is registered
with the Securities and Exchange Commission as a securities
broker-dealer, is a member of the National Association of
Securities Dealers, Inc. (NASD) and is a member of the Security
Investors Protection Corporation (SIPC). Mr. Johnson has been
president, a director and the principal shareholder of AEI Fund
Management, Inc., a real estate management company founded by
him, since 1978. Mr. Johnson is currently a general partner or
principal of the general partner in seventeen other limited
partnerships.
Mark E. Larson, age 46, is Executive Vice President,
Treasurer and Chief Financial Officer and has held these
positions since the formation of AFM in September, 1992, and has
been elected to continue in these positions until December, 1999.
In January, 1993, Mr. Larson was elected to serve as Secretary of
AFM and will continue to serve until December, 1999. Mr. Larson
has been employed by AEI Fund Management, Inc. and affiliated
entities since 1985. From 1979 to 1985, Mr. Larson was with
Apache Corporation as manager of Program Accounting responsible
for the accounting and reports for approximately 46 public
partnerships. Mr. Larson is responsible for supervising the
accounting functions of AFM and the registrant.
ITEM 10. EXECUTIVE COMPENSATION.
The General Partner and affiliates are reimbursed at cost
for all services performed on behalf of the registrant and for
all third party expenses paid on behalf of the registrant. The
cost for services performed on behalf of the registrant is actual
time spent performing such services plus an overhead burden.
These services include organizing the registrant and arranging
for the offer and sale of Units, reviewing properties for
acquisition and rendering administrative and management services.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information pertaining to
the ownership of the Units by each person known by the
Partnership to beneficially own 5% or more of the Units, by each
General Partner, and by each officer or director of the Managing
General Partner as of February 28, 1999:
Name and Address Number of Percent
of Beneficial Owner Units Held of Class
AEI Fund Management XX, Inc. 0 0%
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
AEI Fund Management, Inc. ** 6.3 *
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
Robert P. Johnson 28 *
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
Mark E. Larson 0 0%
1300 Minnesota World Trade Center
30 East 7th Street, St. Paul, Minnesota 55101
* Less than 1%
**A corporation controlled by Mr. Johnson that provides
administrative services to the Partnership.
The persons set forth in the preceding table hold sole voting
power and power of disposition with respect to all of the Units
set forth opposite their names. The General Partners know of no
holders of more than 5% of the outstanding Units.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The registrant, AFM and its affiliates have common
management and utilize the same facilities. As a result, certain
administrative expenses are allocated among these related
entities. All of such activities and any other transactions
involving the affiliates of the General Partner of the registrant
are governed by, and are conducted in conformity with, the
limitations set forth in the Limited Partnership Agreement of the
registrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (Continued)
The following table sets forth the forms of compensation,
distributions and cost reimbursements paid by the registrant to
the General Partners or their Affiliates in connection with the
operation of the Fund and its properties for the period from
inception through December 31, 1998.
Person or Entity Amount Incurred From
Receiving Form and Method Inception (September 2, 1992)
Compensation of Compensation To December 31, 1998
AEI Securities, Inc. Selling Commissions equal to 8% $2,398,039
(formerly AEI of prceeds plus a 2% nonaccountable
Incorporated) expense allowance, most of which was
reallowed to Participating Dealers.
General Partners and Reimbursement at Cost for other $ 884,013
Affiliates Organization and Offering Costs.
General Partners and Reimbursement at Cost for all $ 801,812
Affiliates Acquisition Expenses
General Partners 1% of Net Cash Flow in any fiscal $ 82,880
year until the Limited Partners have
received annual, non-cumulative
distributions of Net Cash Flow equal
to 10% of their Adjusted Capital
Contributions and 10% of any remaining
Net Cash Flow in such fiscal year.
General Partners and Reimbursement at Cost for all $1,351,708
Affiliates Administrative Expenses attributable
to the Fund, including all expenses
related to management and disposition
of the Fund's properties and all other
transfer agency, reporting, partner
relations and other administrative
functions.
General Partners 1% of distributions of Net Proceeds $ 7,890
of Sale until Limited Partners have
received an amount equal to (a) their
Adjusted Capital Contributions, plus
(b) an amount equal to 12% of their
Adjusted Capital Contributions per annum,
cumulative but not compounded, to the
extent not previously distributed.
10% of distributions of Net Proceeds
of Sale thereafter.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(Continued)
The limitations included in the Partnership Agreement
require that the cumulative reimbursements to the General
Partners and their affiliates for administrative expenses not
allowed under the NASAA Guidelines ("Guidelines") will not exceed
the sum of (i) the front-end fees allowed by the Guidelines less
the front-end fees paid, (ii) the cumulative property management
fees allowed but not paid, (iii) any real estate commission
allowed under the Guidelines, and (iv) 10% of Net Cash Flow less
the Net Cash Flow actually distributed. The reimbursements not
allowed under the guidelines include a controlling person's
salary and fringe benefits, rent and depreciation. As of
December 31, 1998, the cumulative reimbursements to the General
Partners and their affiliates did not exceed these amounts.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
A. Exhibits -
Description
3.1 Certificate of Limited
Partnership (incorporated by reference to
Exhibit 3.1 of the registrant's
Registration Statement on Form SB-2 filed
with the Commission on November 9, 1992
[File No. 3354354-C]).
3.2 Limited Partnership
Agreement (incorporated by reference to
Exhibit 3.2 of the registrant's
Registration Statement on Form SB-2 filed
with the Commission on November 9, 1992
[File No. 3354354-C]).
10.1 Net Lease Agreement dated
September 30, 1993 between the Partnership
and HTB Restaurants, Inc. and JB's
Restaurants, Inc. relating to the property
at 1528 Eubank, N.E., Albuquerque, New
Mexico (incorporated by reference to
Exhibit A of Form 8-K filed with the
Commission on October 8, 1993).
10.2 Assignment of Lease dated
February 24, 1994 between the Partnership
and Bird Food, Inc., and the Lease Option
Agreement dated October 5, 1983, relating
to the property at 3680 Citadel Drive
North, Colorado Springs, Colorado
(incorporated by reference to Exhibit A of
Form 8-K filed with the Commission on March
8, 1994).
10.3 Assignment of Lease dated
February 24, 1994 between the Partnership
and Retlen Corporation, Inc., and the Lease
Agreement dated May 11, 1987, relating to
the property at 1410 Jamboree Drive,
Colorado Springs, Colorado (incorporated by
reference to Exhibit B of Form 8-K filed
with the Commission on March 8, 1994).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.4 Net Lease Agreement dated
May 16, 1994 between the Partnership and
RTM Georgia, Inc. relating to the property
at 4950 South Cobb Drive, Smyrna, Georgia
(incorporated by reference to Exhibit 10.11
of Form 10-KSB filed with the Commission on
March 27, 1995).
10.5 Net Lease Agreement dated
July 15, 1994 between the Partnership and
Thomas and King, Inc. relating to the
property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.12 of Form 10-KSB filed with
the Commission on March 27, 1995).
10.6 Net Lease Agreement dated
November 30, 1994 between the Partnership
and Renaissant Development Corporation
relating to the property at 4601 N. 10th
Street, McAllen, Texas (incorporated by
reference to Exhibit 10.16 of Form 10-KSB
filed with the Commission on March 27,
1995).
10.7 Net Lease Agreement dated
December 6, 1994 between the Partnership
and Huntington Restaurants Group, Inc.
relating to the property at 868 N.E.
Alsbury Boulevard, Burleson, Texas
(incorporated by reference to Exhibit 10.17
of Form 10-KSB filed with the Commission on
March 27, 1995).
10.8 Net Lease Agreement dated
January 17, 1995 between the Partnership
and Southland Restaurant Development
Company, L.L.C. relating to the property at
5630 Johnson Street, Lafayette, Louisiana
(incorporated by reference to Exhibit 10.18
of Form 10-KSB filed with the Commission on
March 27, 1995).
10.9 Property Co-Tenancy
Ownership Agreement dated August 21, 1995
between the Partnership and Bruce R. Logan
relating to the property at 1528 Eubank,
N.E., Albuquerque, New Mexico (incorporated
by reference to Exhibit 10.22 of Form
10-KSB filed with the Commission on March
21, 1996).
10.10 Net Lease Agreement
dated August 30, 1995 between the
Partnership and Renaissant Development
Corporation relating to the property at
2960 Boca Chica Boulevard, Brownsville,
Texas (incorporated by reference to Exhibit
10.23 of Form 10-KSB filed with the
Commission on March 21, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.11 Property Co-Tenancy
Ownership Agreement dated October 18, 1995
between the Partnership and Highgrove
Consulting Agency, Inc. relating to the
property at 1528 Eubank, N.E., Albuquerque,
New Mexico (incorporated by reference to
Exhibit 10.28 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.12 Property Co-Tenancy
Ownership Agreement dated October 20, 1995
between the Partnership and The Mark A.
Benson Living Trust relating to the
property at 1528 Eubank, N.E., Albuquerque,
New Mexico (incorporated by reference to
Exhibit 10.30 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.13 Net Lease Agreement
dated November 21, 1995 between the
Partnership and Huntington Restaurants
Group, Inc. relating to the property at
1505 William D. Tate Boulevard, Grapevine,
Texas (incorporated by reference to Exhibit
10.31 of Form 10-KSB filed with the
Commission on March 21, 1996).
10.14 Property Co-Tenancy
Ownership Agreement dated December 6, 1995
between the Partnership and The Joan Koller
Trust relating to the property at 1528
Eubank, N.E., Albuquerque, New Mexico
(incorporated by reference to Exhibit 10.34
of Form 10-KSB filed with the Commission on
March 21, 1996).
10.15 Net Lease Agreement
dated August 2, 1995, between TKC X, LLC
and Garden Ridge, Inc. relating to the
property at 11415 Carolina Place Parkway,
Pineville, North Carolina (incorporated by
reference to Exhibit 10.1 of Form 8-K filed
with the Commission on April 10, 1996).
10.16 First Amendment to
Lease Agreement dated March 1, 1996 between
TKC X, LLC and Garden Ridge, L.P. relating
to the property at 11415 Carolina Place
Parkway, Pineville, North Carolina
(incorporated by reference to Exhibit 10.3
of Form 8-K filed with the Commission on
April 10, 1996).
10.17 Assignment and
Assumption of Lease dated March 28, 1996
between the Partnership, AEI Net Lease
Income & Growth Fund XIX Limited
Partnership, AEI Income & Growth Fund XXI
Limited Partnership, and TKC X, LLC
relating to the property at 11415 Carolina
Place Parkway, Pineville, North Carolina
(incorporated by reference to Exhibit 10.4
of Form 8-K filed with the Commission on
April 10, 1996).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.18 Net Lease Agreement
dated April 10, 1996 between the
Partnership, Robert P. Johnson, AEI
Institutional Net Lease Fund '93 and
Americana Dining Corporation relating to
the property at 5835 Landerbrook Drive,
Lyndhurst, Ohio (incorporated by reference
to Exhibit 10.3 of Form 8-K filed with the
Commission on April 17, 1996).
10.19 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 (incorporated by
reference to Exhibit 10.2 of Form 10-QSB
filed with the Commission on November 13,
1996).
10.20 Surrender and
Termination of Lease Agreement dated
November 22, 1996 between the Partnership,
AEI Net Lease Income & Growth Fund XIX
Limited Partnership, AEI Income & Growth
Fund XXI Limited Partnership and The
Musicland Group, Inc. relating to the
property at 7370 W. 153rd Street, Apple
Valley, Minnesota (incorporated by
reference to Exhibit 10.43 of Form 10-KSB
filed with the Commission on March 21,
1997).
10.21 Property Co-Tenancy
Ownership Agreement dated December 6, 1996
between the Partnership and the John J.
Zeller Living Trust relating to the
property at 4950 South Cobb Drive, Smyrna,
Georgia (incorporated by reference to
Exhibit 10.45 of Form 10-KSB filed with the
Commission on March 21, 1997).
10.22 Property Co-Tenancy
Ownership Agreement dated January 10, 1997
between the partnership and the Mark A.
Benson Living Trust relating to the
property at 4950 South Cobb Drive, Smyrna,
Georgia (incorporated by reference to
Exhibit 10.47 of Form 10-KSB filed with the
Commission on March 21, 1997).
10.23 Purchase Agreement
dated April 15, 1997 between the
Partnership and Anton Kuster, Jr. relating
to the property at 4950 South Cobb Drive,
Smyrna, Georgia (incorporated by reference
to Exhibit 10.1 of Form 10-QSB filed with
the Commission on May 13, 1997).
10.24 Property Co-Tenancy
Ownership Agreement dated April 21, 1997
between the Partnership and Anton Kuster,
Jr. relating to the property at 4950 South
Cobb Drive, Smyrna, Georgia (incorporated
by reference to Exhibit 10.2 of Form 10-QSB
filed with the Commission on May 13, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.25 Development Financing
Agreement dated April 21, 1997 between the
Partnership, AEI Income & Growth Fund XXI
Limited Partnership, Net Lease Income &
Growth Fund 84-A Limited Partnership and
Champps Americana, Inc. relating to the
property at 955 Golf Road, Schaumburg,
Illinois (incorporated by reference to
Exhibit 10.3 of Form 10-QSB filed with the
Commission on May 13, 1997).
10.26 Net Lease Agreement
dated April 21, 1997 between the
Partnership, AEI Income & Growth Fund XXI
Limited Partnership, Net Lease Income &
Growth Fund 84-A Limited Partnership and
Champps Americana, Inc. relating to the
property at 955 Golf Road, Schaumburg,
Illinois (incorporated by reference to
Exhibit 10.4 of Form 10-QSB filed with the
Commission on May 13, 1997).
10.27 Purchase Agreement
dated August 4, 1997 between the
Partnership and Russell C. Mayer, Trustee
and Dixie Mayer, Trustee, or their
Successor Trustees of the Russell C. and
Dixie Mayer Trust relating to the property
at 4950 South Cobb Drive, Smyrna, Georgia
(incorporated by reference to Exhibit 10.1
of Form 10-QSB filed with the Commission on
November 7, 1997).
10.28 Property Co-Tenancy
Agreement dated August 14, 1997 between the
Partnership and Russell C. Mayer, Trustee
and Dixie Mayer, Trustee, or their
Successor Trustees of the Russell C. and
Dixie Mayer Trust relating to the property
at 4950 South Cobb Drive, Smyrna, Georgia
(incorporated by reference to Exhibit 10.2
of Form 10-QSB filed with the Commission on
November 7, 1997).
10.29 Purchase Agreement
dated September 9, 1997 between the
Partnership and Nick DeVito, Inc. relating
to the property at 4950 South Cobb Drive,
Smyrna, Georgia (incorporated by reference
to Exhibit 10.3 of Form 10-QSB filed with
the Commission on November 7, 1997).
10.30 Purchase Agreement
dated September 9, 1997 between the
Partnership and Nick DeVito, Inc. relating
to the property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.4 of Form 10-QSB filed with
the Commission on November 7, 1997).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.31 Purchase Agreement
dated September 16, 1997 between the
Partnership and Richard J. Abbott and
Marjory T. Abbott relating to the property
at 4950 South Cobb Drive, Smyrna, Georgia
(incorporated by reference to Exhibit 10.5
of Form 10-QSB filed with the Commission on
November 7, 1997).
10.32 Purchase Agreement
dated September 16, 1997 between the
Partnership, AEI Institutional Net Lease
Fund '93 and Richard J. Abbott and Marjory
T. Abbott relating to the property at 3240
Towne Boulevard, Middletown, Ohio
(incorporated by reference to Exhibit 10.6
of Form 10-QSB filed with the Commission on
November 7, 1997).
10.33 Property Co-Tenancy
Ownership Agreement dated September 30,
1997 between the Partnership and Richard J.
Abbott and Marjory T. Abbott relating to
the property at 4950 South Cobb Drive,
Smyrna, Georgia (incorporated by reference
to Exhibit 10.7 of Form 10-QSB filed with
the Commission on November 7, 1997).
10.34 Property Co-Tenancy
Ownership Agreement dated September 30,
1997 between the Partnership and Richard J.
Abbott and Marjory T. Abbott relating to
the property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.8 of Form 10-QSB filed with
the Commission on November 7, 1997).
10.35 Property Co-Tenancy
Ownership Agreement dated October 9, 1997
between the Partnership and Nick DeVito,
Inc. relating to the property at 4950 South
Cobb Drive, Smyrna, Georgia (incorporated
by reference to Exhibit 10.9 of Form 10-QSB
filed with the Commission on November 7,
1997).
10.36 Property Co-Tenancy
Ownership Agreement dated October 10, 1997
between the Partnership and Nick DeVito,
Inc. relating to the property at 3240 Towne
Boulevard, Middletown, Ohio (incorporated
by reference to Exhibit 10.10 of Form
10-QSB filed with the Commission on
November 7, 1997).
10.37 Purchase Agreement
dated November 24, 1997 between the
Partnership and David E. Edsall, Trustee of
the David E. Edsall Trust relating to the
property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.40 of Form 10-KSB filed with
the Commission on March 23, 1998).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.38 Purchase Agreement
dated November 24, 1997 between the
Partnership and James Edward Amend relating
to the property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.41 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.39 Property Co-Tenancy
Ownership Agreement dated December 1, 1997
between the Partnership and David E.
Edsall, Trustee of the David E. Edsall
Trust relating to the property at 3240
Towne Boulevard, Middletown, Ohio
(incorporated by reference to Exhibit 10.42
of Form 10-KSB filed with the Commission on
March 23, 1998).
10.40 Purchase Agreement
dated December 1, 1997 between the
Partnership and Joan Koller, Trustee of the
Joan Koller Trust relating to the property
at 3240 Towne Boulevard, Middletown, Ohio
(incorporated by reference to Exhibit 10.43
of Form 10-KSB filed with the Commission on
March 23, 1998).
10.41 Property Co-Tenancy
Ownership Agreement dated December 16, 1997
between the Partnership and James Edward
Amend relating to the property at 3240
Towne Boulevard, Middletown, Ohio
(incorporated by reference to Exhibit 10.44
of Form 10-KSB filed with the Commission on
March 23, 1998).
10.42 Property Co-Tenancy
Ownership Agreement dated December 16, 1997
between the Partnership and Joan Koller,
Trustee of the Joan Koller Trust relating
to the property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.45 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.43 Purchase Agreement
dated December 30, 1997 between the
Partnership, AEI Institutional Net Lease
Fund '93 and Richard W. Anderson and
Marilyn R. Anderson, Trustees of the
Anderson Family Trust relating to the
property at 5835 Landerbrook Drive,
Lyndhurst Ohio (incorporated by reference
to Exhibit 10.46 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.44 First Amendment to Net
Lease Agreement dated December 31, 1997
between the Partnership, AEI Income &
Growth Fund XXI Limited Partnership, Net
Lease Income & Growth Fund 84-A Limited
Partnership and Champps Americana, Inc.
relating to the property at 955 Golf Road,
Schaumburg, Illinois (incorporated by
reference to Exhibit 10.47 of Form 10-KSB
filed with the Commission on March 23,
1998).
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
(Continued)
A. Exhibits -
Description
10.45 Purchase Agreement
dated January 2, 1998 between the
Partnership and Helen M. Rafter relating to
the property at 3240 Towne Boulevard,
Middletown, Ohio (incorporated by reference
to Exhibit 10.48 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.46 Property Co-Tenancy
Ownership Agreement dated January 7, 1998
between the Partnership and Helen M. Rafter
relating to the property at 3240 Towne
Boulevard, Middletown, Ohio (incorporated
by reference to Exhibit 10.49 of Form 10-
KSB filed with the Commission on March 23,
1998).
10.47 Property Co-Tenancy
Ownership Agreement dated January 27, 1998
between the Partnership and Richard W.
Anderson and Marilyn R. Anderson, Trustees
of the Anderson Family Trust relating to
the property at 5835 Landerbrook Drive,
Lyndhurst Ohio (incorporated by reference
to Exhibit 10.50 of Form 10-KSB filed with
the Commission on March 23, 1998).
10.48 Development Financing Agreement
dated August 11, 1998 between the
Partnership, Net Lease Income & Growth Fund
84-A Limited Partnership and Americana
Dining Corporation relating to the property
at 3993 Morse Crossing, Columbus, Ohio
(incorporated by reference to Exhibit 10.1
of Form 10-QSB filed with the Commission on
November 9, 1998).
10.49 Net Lease Agreement dated August
11, 1998 between the Partnership, Net Lease
Income & Growth Fund 84-A Limited
Partnership and Americana Dining
Corporation relating to the property at
3993 Morse Crossing, Columbus, Ohio
(incorporated by reference to Exhibit 10.2
of Form 10-QSB filed with the Commission on
November 9, 1998).
27 Financial Data Schedule for
period ended December 31, 1998.
B. Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AEI NET LEASE INCOME & GROWTH FUND XX
Limited Partnership
By: AEI Fund Management XX, Inc.
Its Managing General Partner
March 12, 1999 By: /s/ Robert P Johnson
Robert P. Johnson, President and
Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert P Johnson President (Principal Executive Officer) March 12, 1999
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E Larson Executive Vice President, Treasurer March 12, 1999
Mark E. Larson and Chief Financial Officer
(Principal Accounting Officer)
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<NAME> AEI NET LEASE INCOME & GROWTH FUND XX LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,407,691
<SECURITIES> 0
<RECEIVABLES> 47,792
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,455,483
<PP&E> 18,537,315
<DEPRECIATION> (1,320,192)
<TOTAL-ASSETS> 18,672,606
<CURRENT-LIABILITIES> 509,178
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,163,428
<TOTAL-LIABILITY-AND-EQUITY> 18,672,606
<SALES> 0
<TOTAL-REVENUES> 2,038,914
<CGS> 0
<TOTAL-COSTS> 725,152
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 1,447,926
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<INCOME-CONTINUING> 1,447,926
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