Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | AEI Income & Growth Fund 26 LLC |
Document Type | 10-K |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | shares | 1,738,006 |
Entity Public Float | $ | $ 0 |
Amendment Flag | false |
Entity Central Index Key | 0001326321 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2018 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Ex Transition Period | false |
Balance Sheet
Balance Sheet - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash | $ 460,280 | $ 491,448 |
Real Estate Investments: | ||
Land | 3,666,185 | 4,553,261 |
Buildings | 8,697,341 | 9,879,009 |
Acquired Intangible Lease Assets | 706,318 | 706,318 |
Real Estate Held for Investment, at cost | 13,069,844 | 15,138,588 |
Accumulated Depreciation and Amortization | (3,560,175) | (3,524,447) |
Real Estate Held for Investment, Net | 9,509,669 | 11,614,141 |
Real Estate Held for Sale | 805,570 | 0 |
Total Real Estate Investments | 10,315,239 | 11,614,141 |
Total Assets | 10,775,519 | 12,105,589 |
Current Liabilities: | ||
Payable to AEI Fund Management, Inc. | 45,278 | 50,552 |
Distributions Payable | 170,104 | 170,104 |
Total Current Liabilities | 215,382 | 220,656 |
Long-term Liabilities: | ||
Acquired Below-Market Lease Intangibles, Net | 199,675 | 229,259 |
Members’ Equity (Deficit): | ||
Managing Members | (45,998) | (24,569) |
Limited Members – 10,000,000 Units authorized; 1,738,006 Units issued and outstanding as of December 31, 2018 and 2017 | 10,406,460 | 11,680,243 |
Total Members’ Equity | 10,360,462 | 11,655,674 |
Total Liabilities and Members’ Equity | $ 10,775,519 | $ 12,105,589 |
Balance Sheet (Parentheticals)
Balance Sheet (Parentheticals) - Limited Partner [Member] - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Limited Members, units authorized | 10,000,000 | 10,000,000 |
Limited Members, units issued | 1,738,006 | 1,738,006 |
Limited Members, units outstanding | 1,738,006 | 1,738,006 |
Statement of Operations
Statement of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Rental Income | $ 961,688 | $ 944,311 |
Expenses: | ||
LLC Administration – Affiliates | 138,370 | 144,461 |
LLC Administration and Property Management – Unrelated Parties | 151,049 | 119,101 |
Depreciation and Amortization | 460,353 | 453,320 |
Real Estate Impairment | 830,973 | 0 |
Total Expenses | 1,580,745 | 716,882 |
Operating Income (Loss) | (619,057) | 227,429 |
Other Income: | ||
Interest Income | 3,428 | 1,568 |
Net Income | (615,629) | 228,997 |
Net Income (Loss) Allocated: | ||
Managing Members | (1,850) | 6,870 |
Limited Members | $ (613,779) | $ 222,127 |
Net Income (Loss) per LLC Unit (in Dollars per share) | $ (0.35) | $ 0.13 |
Weighted Average Units Outstanding – Basic and Diluted (in Shares) | 1,738,006 | 1,739,506 |
Statement of Cash Flows
Statement of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net Income (Loss) | $ (615,629) | $ 228,997 |
Adjustments to Reconcile Net Income To Net Cash Provided by Operating Activities: | ||
Depreciation and Amortization | 438,345 | 431,312 |
Real Estate Impairment | 830,973 | 0 |
Increase (Decrease) in Payable to AEI Fund Management, Inc. | (5,274) | 29,193 |
Total Adjustments | 1,264,044 | 460,505 |
Net Cash Provided By (Used For) Operating Activities | 648,415 | 689,502 |
Cash Flows from Investing Activities: | ||
Investments in Real Estate | 0 | (84,293) |
Cash Flows from Financing Activities: | ||
Distributions Paid to Members | (679,583) | (679,996) |
Repurchase of LLC Units | 0 | (37,456) |
Net Cash Provided By (Used For) Financing Activities | (679,583) | (717,452) |
Net Increase (Decrease) in Cash | (31,168) | (112,243) |
Cash, beginning of year | 491,448 | 603,691 |
Cash, end of year | $ 460,280 | $ 491,448 |
Statement of Changes in Members
Statement of Changes in Members' Equity - USD ($) | Managing Member [Member] | Limited Member [Member] | Total |
Balance at Dec. 31, 2016 | $ (10,319) | $ 12,154,450 | $ 12,144,131 |
Balance (in Shares) at Dec. 31, 2016 | 1,744,006 | ||
Balance at Dec. 31, 2017 | (24,569) | $ 11,680,243 | 11,655,674 |
Balance (in Shares) at Dec. 31, 2017 | 1,738,006 | ||
Distributions Declared | (19,996) | $ (660,002) | (679,998) |
Repurchase of LLC Units | (1,124) | $ (36,332) | (37,456) |
Units Repurchased (in Shares) | (6,000) | ||
Net Income | 6,870 | $ 222,127 | 228,997 |
Balance at Dec. 31, 2018 | (45,998) | $ 10,406,460 | 10,360,462 |
Balance (in Shares) at Dec. 31, 2018 | 1,738,006 | ||
Distributions Declared | (19,579) | $ (660,004) | (679,583) |
Net Income | $ (1,850) | $ (613,779) | $ (615,629) |
Organization
Organization | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | (1) Organization – AEI Income & Growth Fund 26 LLC (“Company”), a Limited Liability Company, was formed on March 14, 2005 to acquire and lease commercial properties to operating tenants. The Company's operations are managed by AEI Fund Management XXI, Inc. (“AFM”), the Managing Member. Robert P. Johnson, the President and sole director of AFM, serves as the Special Managing Member. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AEI Fund Management, Inc. (“AEI”), an affiliate of AFM, performs the administrative and operating functions for the Company. The terms of the offering called for a subscription price of $10 per LLC Unit, payable on acceptance of the offer. The Company commenced operations on April 3, 2006 when minimum subscriptions of 150,000 LLC Units ($1,500,000) were accepted. The offering terminated October 19, 2007, when the extended offering period ended. The Company received subscriptions for 1,832,736 Units. Under the terms of the Operating Agreement, the Limited Members and Managing Members contributed funds of $18,327,360 and $1,000, respectively. The Company shall continue until December 31, 2055, unless dissolved, terminated and liquidated prior to that date. During operations, any Net Cash Flow, as defined, which the Managing Members determine to distribute will be distributed 97% to the Limited Members and 3% to the Managing Members. Distributions to Limited Members will be made pro rata by Units. Any Net Proceeds of Sale, as defined, from the sale or financing of properties which the Managing Members determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Members and 1% to the Managing Members until the Limited Members receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 6.5% 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 Members and 10% to the Managing Members. Distributions to the Limited Members 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 property, will be allocated 97% to the Limited Members and 3% to the Managing Members. Net losses from operations will be allocated 99% to the Limited Members and 1% to the Managing Members. For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Operating Agreement as follows: (i) first, to those Members with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Members and 1% to the Managing Members until the aggregate balance in the Limited Members' capital accounts equals the sum of the Limited Members' Adjusted Capital Contributions plus an amount equal to 6.5% 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 Members and 10% to the Managing Members. Losses will be allocated 99% to the Limited Members and 1% to the Managing Members. The Managing Members are not required to currently fund a deficit capital balance. Upon liquidation of the Company or withdrawal by a Managing Member, the Managing Members will contribute to the Company an amount equal to the lesser of the deficit balances in their capital accounts or 1.01% of the total capital contributions of the Limited Members over the amount previously contributed by the Managing Members. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | (2) Summary of Significant Accounting Policies – Financial Statement Presentation The accounts of the Company 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 United States Generally Accepted Accounting Principles (US GAAP). 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. Significant items, subject to such estimates and assumptions, include the carrying value of real estate held for investment, real estate held for sale and related intangible assets. The Company regularly assesses whether market events and conditions indicate that it is reasonably possible to recover the carrying amounts of its investments in real estate from future operations and sales. A change in those market events and conditions could have a material effect on the carrying amount of its real estate. Cash Concentrations of Credit Risk The Company's cash is deposited in one financial institution and at times during the year it may exceed FDIC insurance limits. Receivables Credit terms are extended to tenants in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Receivables are recorded at their estimated net realizable value. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts, if any, will be collectible in all material respects and thus an allowance is not necessary. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Receivables considered uncollectible are written off. Income Taxes The income or loss of the Company for federal income tax reporting purposes is includable in the income tax returns of the Members. In general, no recognition has been given to income taxes in the accompanying financial statements. The tax return and the amount of distributable Company income or loss are subject to examination by federal and state taxing authorities. If such an examination results in changes to distributable Company income or loss, the taxable income of the members would be adjusted accordingly. Primarily due to its tax status as a partnership, the Company has no significant tax uncertainties that require recognition or disclosure. The Company is no longer subject to U.S. federal income tax examinations for tax years before 2015, and with few exceptions, is no longer subject to state tax examinations for tax years before 2015. Revenue Recognition The Company's real estate is leased under net leases, classified as operating leases. The leases provide for base annual rental payments payable in monthly installments. The Company recognizes rental income according to the terms of the individual leases. For leases that contain stated rental increases, the increases are recognized in the year in which they are effective. Contingent rental payments are recognized when the contingencies on which the payments are based are satisfied and the rental payments become due under the terms of the leases. Real Estate Upon acquisition of real properties, the Company records them in the financial statements at cost. The purchase price is allocated to tangible assets, consisting of land and building, and to identified intangible assets and liabilities, which may include the value of above market and below market leases and the value of in-place leases. The allocation of the purchase price is based upon the fair value of each component of the property. Although independent appraisals may be used to assist in the determination of fair value, in many cases these values will be based upon management’s assessment of each property, the selling prices of comparable properties and the discounted value of cash flows from the asset. The fair values of above market and below market in-place leases will be recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the non-cancelable term of the lease including any bargain renewal periods. The above market and below market lease values will be capitalized as intangible lease assets or liabilities. Above market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases. Below market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases, including any bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market and below market in-place lease values relating to that lease would be recorded as an adjustment to rental income. The fair values of in-place leases will include estimated direct costs associated with obtaining a new tenant, and opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant may include commissions, tenant improvements, and other direct costs and are estimated, in part, by management’s consideration of current market costs to execute a similar lease. These direct costs will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. The value of opportunity costs will be calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These intangibles will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. The Company tests real estate for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Company will hold and operate, it compares the carrying amount of the property to the estimated probability-weighted future undiscounted 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 Company recognizes an impairment loss by the amount by which the carrying amount of the property exceeds the fair value of the property. For properties held for sale, the Company determines whether impairment has occurred by comparing the property’s estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value. For financial reporting purposes, the buildings owned by the Company are depreciated using the straight-line method over an estimated useful life of 25 years. Intangible lease assets are amortized using the straight-line method for financial reporting purposes based on the remaining life of the lease. The disposition of a property or classification of a property as Real Estate Held for Sale by the Company does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. Therefore, the results from operating and selling the property are included in continuing operations. The Company accounts for properties owned as tenants-in-common with affiliated entities 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 Company's percentage share of the properties' land, building, liabilities, revenues and expenses. The Company’s properties are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which the properties are located. These laws could require the Company to investigate and remediate the effects of the release or disposal of hazardous materials at these locations if found. For each property, an environmental assessment is completed prior to acquisition. In addition, the lease agreements typically strictly prohibit the production, handling, or storage of hazardous materials (except where incidental to the tenant’s business such as use of cleaning supplies) in violation of applicable law to restrict environmental and other damage. Environmental liabilities are recorded when it is determined the liability is probable and the costs can reasonably be estimated. There were no environmental issues noted or liabilities recorded at December 31, 2018 and 2017. Fair Value Measurements Fair value, as defined by US GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. US GAAP establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. US GAAP requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1 inputs, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. At December 31, 2018 and 2017, the Company had no financial assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure. The Company had the following nonfinancial assets measured on a nonrecurring basis that were recorded at fair value during 2018. The Dick’s Sporting Goods store in Fredericksburg, Virginia with a carrying amount of $2,423,973 at December 31, 2018, was written down to its estimated fair value of $1,593,000 after completing our long-lived asset valuation analysis. The resulting impairment charge of $830,973 was included in earnings for the fourth quarter of 2018. The fair value of the property was based upon estimated probability-weighted future undiscounted cash flows expected to result from the property and its eventual disposition. These estimates are considered Level 3 inputs in the valuation hierarchy. Income Per Unit Income per LLC Unit is calculated based on the weighted average number of LLC Units outstanding during each period presented. Diluted income per LLC Unit considers the effect of any potentially dilutive Unit equivalents, of which the Company had none for each of the years ended December 31, 2018 and 2017. Reportable Segments The Company invests in single tenant commercial properties throughout the United States that are net leased to tenants in various industries. Because these net leased properties have similar economic characteristics, the Company evaluates operating performance on an overall portfolio basis. Therefore, the Company’s properties are classified as one reportable segment. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09 regarding ASC Topic 606, Revenue from Contracts with Customers. This standard was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities are to use a five-step contract review model to ensure revenue is recognized, measured and disclosed in accordance with this principle. Those steps include the following: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to each performance obligation in the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Management has concluded that all of the Company's material revenue streams fall outside of the scope of this guidance. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. During 2018, the Company selected the modified retrospective transition method as of the date of adoption effective January 1, 2018. Management has concluded that the majority of total revenues consist of rental income from leasing arrangements, which are specifically excluded from the standard. The Company analyzed its remaining revenue streams, inclusive of gains and losses on real estate sales, and concluded there are no changes in revenue recognition with the adoption of the new standard. As such, adoption of the standard did not result in a cumulative adjustment recognized as of January 1, 2018, and the standard did not have a material impact on the Company's financial statements. In January 2017, the FASB issued ASU 2017-01, which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted, and is required to be applied prospectively to any transactions occurring within the period of adoption. We expect the new standard will result in all of our real estate acquisitions being considered asset acquisitions, whereby substantially all acquisition costs related to our real estate acquisitions will be capitalized. Prior to the adoption of the new standard, all of our real estate acquisitions completed after January 1, 2009, were considered acquisitions of businesses, whereby all acquisition-related costs were expensed as incurred. During 2018, the Company has adopted the accounting pronouncement effective January 1, 2018, and applied this guidance prospectively. The adoption did not have a material effect on the Company's financial statements. Recently Issued Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements for the analysis of members' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of members' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company anticipates its first presentation of year-to-date quarterly changes in members' equity will be included in its Form 10Q for the quarter ended March 31, 2019. In February 2016, the FASB issued ASU 2016-02, which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. It is to be adopted using a modified retrospective approach. Management is currently evaluating the impact the adoption of this guidance will have on the Company's financial statements and does not expect this guidance will have a material impact on the financial statements given the nature of the leases held by the Company. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | (3) Related Party Transactions – The Company owns the percentage interest shown below in the following properties as tenants-in-common with the affiliated entities listed: property in Wichita, Kansas (40% – AEI Income & Growth Fund 25 LLC); Advance Auto Parts store (55% – AEI Income & Growth Fund 24 LLC); Applebee’s restaurant in Crawfordsville, Indiana (40% – AEI Income & Growth Fund XXII Limited Partnership); Best Buy store (30% – AEI Income & Growth Fund XXI Limited Partnership and AEI Income & Growth Fund 23 LLC); Dick’s Sporting Goods store in Fredericksburg, Virginia (27% – AEI Income & Growth Fund 23 LLC, AEI Income & Growth Fund 24 LLC and AEI Income & Growth Fund 25 LLC); and Fresenius Medical Center (54% – AEI Income & Growth Fund 27 LLC). AEI received the following reimbursements for costs and expenses from the Company for the years ended December 31: 2018 2017 AEI is reimbursed for costs incurred in providing services related to managing the Company’s operations and properties, maintaining the Company’s books, and communicating with the Limited Members. $ 138,370 $ 144,461 AEI is reimbursed for all direct expenses it paid on the Company’s behalf to third parties related to Company administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. $ 151,049 $ 119,101 The payable to AEI Fund Management, Inc. represents the balance due for the services described in 3a and b. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. |
Real Estate Investments
Real Estate Investments | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Real Estate Disclosure [Text Block] | (4) Real Estate Investments – The Company leases its properties to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Company is responsible for repairs to the structural components of the building, the roof and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 20 years. The leases provide the tenants with three to four five-year renewal options subject to the same terms and conditions as the primary term. The lease for the Best Buy store was extended to end on January 19, 2023. The Company's properties are commercial, single-tenant buildings. The building in Wichita, Kansas was constructed in 1996, renovated in 2001 and acquired in 2006. The Advance Auto Parts store was constructed in 2004 and acquired in 2006. The Applebee’s restaurant in Crawfordsville, Indiana was constructed in 1996 and acquired in 2006. The Starbucks restaurant was constructed and acquired in 2007. The Best Buy store was constructed in 1990, renovated in 1997 and acquired in 2008. The land for the Dick’s Sporting Goods store was acquired in 2007 and construction of the store was completed in 2008. The Fresenius Medical Center was constructed in 2012 and acquired in 2014. The Zales store was constructed in 1983, renovated in 2014 and acquired in 2015. The Dollar Tree store was constructed in 2015 and acquired in 2016. There have been no costs capitalized as improvements subsequent to the acquisitions, except for $30,000 of tenant improvements related to the Cellular Connection store. The cost of the properties not held for sale and related accumulated depreciation at December 31, 2018 are as follows: Property Land Buildings Total Accumulated Depreciation Biomat USA Plasma Center, Wichita, KS $ 507,489 $ 1,277,436 $ 1,784,925 $ 728,461 Advance Auto Parts, Middletown, OH 112,315 909,974 1,022,289 458,024 Cellular Connection, Bluffton, IN 344,008 836,108 1,180,116 373,596 Best Buy, Eau Claire, WI 474,137 1,547,025 2,021,162 675,531 Dick’s Sporting Goods, Fredericksburg, VA 1,053,836 1,241,794 2,295,630 702,630 Fresenius Medical Center, Chicago, IL 464,400 665,142 1,129,542 106,418 Zales, Enid, OK 440,000 903,630 1,343,630 137,047 Dollar Tree, West Point, MS 270,000 1,316,232 1,586,232 153,558 $ 3,666,185 $ 8,697,341 $ 12,363,526 $ 3,335,265 For the years ended December 31, 2018 and 2017, the Company recognized depreciation expense of $400,732 and $396,640, respectively. The following schedule presents the cost and related accumulated amortization of acquired lease intangibles not held for sale at December 31: 2018 2017 Cost Accumulated Amortization Cost Accumulated Amortization In-Place Lease Intangibles (weighted average life of 85 and 97 months, respectively) $ 633,712 $ 196,500 $ 633,712 $ 136,879 Above-Market Lease Intangibles (weighted average life of 70 and 82 months, respectively) 72,606 28,410 72,606 20,834 Acquired Intangible Lease Assets $ 706,318 $ 224,910 $ 706,318 $ 157,713 Acquired Below-Market Lease Intangibles (weighted average life of 81 and 93 months, respectively) $ 283,495 $ 83,820 $ 283,495 $ 54,236 For the years ended December 31, 2018 and 2017, the value of in-place lease intangibles amortized to expense was $59,621 and $56,680, the decrease to rental income for above-market leases was $7,576 and $7,576, and the increase to rental income for below-market leases was $29,584 and $29,584, respectively. For lease intangibles not held for sale as of December 31, 2018, the estimated amortization expense is $62,108, the estimated decrease to rental income for above-market leases is $7,576 and the estimated increase to rental income for below-market leases is $29,584 for each of the next five succeeding years. The Company owns a 40% interest in a former Sports Authority store in Wichita, Kansas. On March 2, 2016, the tenant, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2018, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. The owners listed the property for lease with a real estate broker in the Wichita area. While the property is vacant, the Company is responsible for its 40% share of real estate taxes and other costs associated with maintaining the property. On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property. The tenant will operate a Biomat USA Plasma Center in the space. The Company’s 40% share of annual rent, which commenced on June 18, 2018, is $37,071. Biomat agreed to pay for the costs to divide the building into two separate spaces, the costs of tenant improvements to remodel the Biomat space and 28% of the cost to replace the roof. In the second quarter of 2018, the Company recorded $54,219 as a property expense for its 40% share of the remaining cost to replace the roof. At December 31, 2017, the Company accrued its 40% share of lease commissions due to real estate brokers totaling $54,293 that were owed as part of the lease transaction. This amount was capitalized and will be amortized over the term of the lease. The Company is continuing to pursue additional tenants for the remaining space. On March 31, 2017, the lease term ended for the Starbucks store in Bluffton, Indiana. Effective April 1, 2017, the Company entered into a lease agreement with a primary term of six years with The Cellular Connection LLC, a cell phone retailer that was subleasing the property from Starbucks Corporation. The tenant is scheduled to pay annual rent of $39,156 during the base lease term. As part of the lease transaction, the Company paid a tenant improvement allowance of $30,000 that was capitalized and will be depreciated. The Company owns a 27% interest in a Dick’s Sporting Goods store in Fredericksburg, Virginia. The remaining interests in the property are owned by three affiliates of the Company. On January 31, 2019, the lease term ended, and the tenant returned possession of the property to the owners. While the property is vacant, the Company is responsible for its 27% share of real estate taxes and other costs associated with maintaining the property. The owners have listed the property for lease with a real estate broker in the Fredericksburg area. The annual rent from this property represented approximately 24% of the total annual rent of the Company’s property portfolio. The loss of rent and increased expenses related to this property decreased the Company’s cash flow. Consequently, beginning with the first quarter of 2019, the Company reduced its regular quarterly cash distribution rate from $0.0949 per Unit to $0.0527 per Unit. Based on its long-lived asset valuation analysis, the Company determined the Dick’s Sporting Goods store was impaired. As a result, in the fourth quarter of 2018, a charge to operations for real estate impairment of $830,973 was recognized, which was the difference between the carrying value at December 31, 2018 of $2,423,973 and the estimated fair value of $1,593,000. The charge was recorded against the cost of the land and building. In December 2018, the Company decided to sell the Applebee’s restaurant in Crawfordsville, Indiana. In January 2019, the Company entered into an agreement to sell the property to an unrelated third party. The sale is subject to contingencies and may not be completed. If the sale is completed, the Company expects to receive net proceeds of approximately $1,242,000, which will result in a net gain of approximately $436,400. At December 31, 2018, the property was classified as Real Estate Held for Sale with a carrying value of $805,570. For properties owned as of December 31, 2018, the minimum future rent payments required by the leases are as follows: 2019 $ 714,367 2020 660,207 2021 664,650 2022 673,025 2023 497,502 Thereafter 1,135,177 $ 4,344,928 There were no contingent rents recognized in 2018 and 2017. |
Major Tenants
Major Tenants | 12 Months Ended |
Dec. 31, 2018 | |
Policy Text Block [Abstract] | |
Major Customers, Policy [Policy Text Block] | (5) Major Tenants – The following schedule presents rental income from individual tenants, or affiliated groups of tenants, who each contributed more than ten percent of the Company's total rental income for the years ended December 31: Tenants 2018 2017 Dick’s Sporting Goods, Inc. $ 232,950 $ 232,950 Best Buy Stores, L.P. 156,662 149,334 Dollar Tree Stores, Inc. 137,084 137,084 Apple Indiana II LLC 103,184 103,184 Zale Delaware Inc. 98,024 98,024 Aggregate rental income of major tenants $ 727,904 $ 720,576 Aggregate rental income of major tenants as a percentage of total rental income 76% 76% |
Members' Equity
Members' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Partners' Capital Notes [Abstract] | |
Partners' Capital Notes Disclosure [Text Block] | (6) Members’ Equity – For the years ended December 31, 2018 and 2017, the Company declared distributions of $679,583 and $679,998, respectively. The Limited Members received distributions of $660,004 and $660,002 and the Managing Members received distributions of $19,579 and $19,996 for the years, respectively. The Limited Members' distributions represented $0.38 and $0.38 per LLC Unit outstanding using 1,738,006 and 1,739,506 weighted average Units in 2018 and 2017, respectively. The distributions represented $0.12 and $0.11 per Unit of Net Income and $0.26 and $0.27 per Unit of return of contributed capital in 2018 and 2017, respectively. As part of the distributions discussed above, the Company distributed net sale proceeds (from property sales completed in 2015) of $40,404 and $20,202 in 2018 and 2017, respectively. The Limited Members received distributions of $40,000 and $20,000 and the Managing Members received distributions of $404 and $202 for the years, respectively. The Limited Members’ distributions represented $0.02 and $0.01 per Unit for the years, respectively. The Company may repurchase Units from Limited Members who have tendered their Units to the Company. Such Units may be acquired at a discount. The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company. During 2018, the Company did not repurchase any Units from the Limited Members. On April 1, 2017, the Company repurchased a total of 6,000.0 Units for $36,332 from three Limited Members in accordance with the Operating Agreement. The Company acquired these Units using Net Cash Flow from operations. The repurchases increase the remaining Limited Members’ ownership interest in the Company. As a result of these repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of $1,124 in 2017. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | (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: 2018 2017 Net Income (Loss) for Financial Reporting Purposes $ (615,629) $ 228,997 Depreciation for Tax Purposes Under Depreciation and Amortization for Financial Reporting Purposes 134,269 128,943 Real Estate Impairment Loss Not Recognized for Tax Purposes 830,973 0 Taxable Income to Members $ 349,613 $ 357,940 The following is a reconciliation of Members’ Equity for financial reporting purposes to Members’ Equity reported for federal income tax purposes for the years ended December 31: 2018 2017 Members’ Equity for Financial Reporting Purposes $ 10,360,462 $ 11,655,674 Adjusted Tax Basis of Investments in Real Estate Over Net Investments in Real Estate for Financial Reporting Purposes 2,592,175 1,626,933 Income Accrued for Tax Purposes Over Income for Financial Reporting Purposes 19,366 19,366 Syndication Costs Treated as Reduction of Capital For Financial Reporting Purposes 2,691,997 2,691,997 Members’ Equity for Tax Reporting Purposes $ 15,664,000 $ 15,993,970 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Distribution Policy, Members or Limited Partners, Description | During operations, any Net Cash Flow, as defined, which the Managing Members determine to distribute will be distributed 97% to the Limited Members and 3% to the Managing Members.  Distributions to Limited Members will be made pro rata by Units.Any Net Proceeds of Sale, as defined, from the sale or financing of properties which the Managing Members determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Members and 1% to the Managing Members until the Limited Members receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 6.5% 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 Members and 10% to the Managing Members.  Distributions to the Limited Members will be made pro rata by Units. |
Key Provisions of Operating or Partnership Agreement, Description | For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of property, will be allocated 97% to the Limited Members and 3% to the Managing Members.  Net losses from operations will be allocated 99% to the Limited Members and 1% to the Managing Members.For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Operating Agreement as follows: (i) first, to those Members with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Members and 1% to the Managing Members until the aggregate balance in the Limited Members' capital accounts equals the sum of the Limited Members' Adjusted Capital Contributions plus an amount equal to 6.5% 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 Members and 10% to the Managing Members.  Losses will be allocated 99% to the Limited Members and 1% to the Managing Members.The Managing Members are not required to currently fund a deficit capital balance.  Upon liquidation of the Company or withdrawal by a Managing Member, the Managing Members will contribute to the Company an amount equal to the lesser of the deficit balances in their capital accounts or 1.01% of the total capital contributions of the Limited Members over the amount previously contributed by the Managing Members. |
Basis of Accounting, Policy [Policy Text Block] | Financial Statement Presentation The accounts of the Company are maintained on the accrual basis of accounting for both federal income tax purposes and financial reporting purposes. |
Use of Estimates, Policy [Policy Text Block] | Accounting Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with United States Generally Accepted Accounting Principles (US GAAP). 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. Significant items, subject to such estimates and assumptions, include the carrying value of real estate held for investment, real estate held for sale and related intangible assets. The Company 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. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Cash Concentrations of Credit Risk The Company's cash is deposited in one financial institution and at times during the year it may exceed FDIC insurance limits. |
Receivables, Policy [Policy Text Block] | Receivables Credit terms are extended to tenants in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral. Receivables are recorded at their estimated net realizable value. The Company follows a policy of providing an allowance for doubtful accounts; however, based on historical experience, and its evaluation of the current status of receivables, the Company is of the belief that such accounts, if any, will be collectible in all material respects and thus an allowance is not necessary. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Receivables considered uncollectible are written off. |
Income Tax, Policy [Policy Text Block] | Income Taxes The income or loss of the Company for federal income tax reporting purposes is includable in the income tax returns of the Members. In general, no recognition has been given to income taxes in the accompanying financial statements. The tax return and the amount of distributable Company income or loss are subject to examination by federal and state taxing authorities. If such an examination results in changes to distributable Company income or loss, the taxable income of the members would be adjusted accordingly. Primarily due to its tax status as a partnership, the Company has no significant tax uncertainties that require recognition or disclosure. The Company is no longer subject to U.S. federal income tax examinations for tax years before 2015, and with few exceptions, is no longer subject to state tax examinations for tax years before 2015. |
Revenue Recognition, Leases [Policy Text Block] | Revenue Recognition The Company's real estate is leased under net leases, classified as operating leases. The leases provide for base annual rental payments payable in monthly installments. The Company recognizes rental income according to the terms of the individual leases. For leases that contain stated rental increases, the increases are recognized in the year in which they are effective. Contingent rental payments are recognized when the contingencies on which the payments are based are satisfied and the rental payments become due under the terms of the leases. |
Property, Plant and Equipment, Policy [Policy Text Block] | Real Estate Upon acquisition of real properties, the Company records them in the financial statements at cost. The purchase price is allocated to tangible assets, consisting of land and building, and to identified intangible assets and liabilities, which may include the value of above market and below market leases and the value of in-place leases. The allocation of the purchase price is based upon the fair value of each component of the property. Although independent appraisals may be used to assist in the determination of fair value, in many cases these values will be based upon management’s assessment of each property, the selling prices of comparable properties and the discounted value of cash flows from the asset. The fair values of above market and below market in-place leases will be recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the non-cancelable term of the lease including any bargain renewal periods. The above market and below market lease values will be capitalized as intangible lease assets or liabilities. Above market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases. Below market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases, including any bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market and below market in-place lease values relating to that lease would be recorded as an adjustment to rental income. The fair values of in-place leases will include estimated direct costs associated with obtaining a new tenant, and opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant may include commissions, tenant improvements, and other direct costs and are estimated, in part, by management’s consideration of current market costs to execute a similar lease. These direct costs will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. The value of opportunity costs will be calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These intangibles will be included in intangible lease assets on the balance sheet and will be amortized to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed. The Company tests real estate for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Company will hold and operate, it compares the carrying amount of the property to the estimated probability-weighted future undiscounted 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 Company recognizes an impairment loss by the amount by which the carrying amount of the property exceeds the fair value of the property. For properties held for sale, the Company determines whether impairment has occurred by comparing the property’s estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value. For financial reporting purposes, the buildings owned by the Company are depreciated using the straight-line method over an estimated useful life of 25 years. Intangible lease assets are amortized using the straight-line method for financial reporting purposes based on the remaining life of the lease. The disposition of a property or classification of a property as Real Estate Held for Sale by the Company does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. Therefore, the results from operating and selling the property are included in continuing operations. The Company accounts for properties owned as tenants-in-common with affiliated entities 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 Company's percentage share of the properties' land, building, liabilities, revenues and expenses. The Company’s properties are subject to environmental laws and regulations adopted by various governmental entities in the jurisdiction in which the properties are located. These laws could require the Company to investigate and remediate the effects of the release or disposal of hazardous materials at these locations if found. For each property, an environmental assessment is completed prior to acquisition. In addition, the lease agreements typically strictly prohibit the production, handling, or storage of hazardous materials (except where incidental to the tenant’s business such as use of cleaning supplies) in violation of applicable law to restrict environmental and other damage. Environmental liabilities are recorded when it is determined the liability is probable and the costs can reasonably be estimated. There were no environmental issues noted or liabilities recorded at December 31, 2018 and 2017. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value Measurements Fair value, as defined by US GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. US GAAP establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. US GAAP requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1 inputs, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data. At December 31, 2018 and 2017, the Company had no financial assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure. The Company had the following nonfinancial assets measured on a nonrecurring basis that were recorded at fair value during 2018. The Dick’s Sporting Goods store in Fredericksburg, Virginia with a carrying amount of $2,423,973 at December 31, 2018, was written down to its estimated fair value of $1,593,000 after completing our long-lived asset valuation analysis. The resulting impairment charge of $830,973 was included in earnings for the fourth quarter of 2018. The fair value of the property was based upon estimated probability-weighted future undiscounted cash flows expected to result from the property and its eventual disposition. These estimates are considered Level 3 inputs in the valuation hierarchy. |
Earnings Per Share, Policy [Policy Text Block] | Income Per Unit Income per LLC Unit is calculated based on the weighted average number of LLC Units outstanding during each period presented. Diluted income per LLC Unit considers the effect of any potentially dilutive Unit equivalents, of which the Company had none for each of the years ended December 31, 2018 and 2017. |
Segment Reporting, Policy [Policy Text Block] | Reportable Segments The Company invests in single tenant commercial properties throughout the United States that are net leased to tenants in various industries. Because these net leased properties have similar economic characteristics, the Company evaluates operating performance on an overall portfolio basis. Therefore, the Company’s properties are classified as one reportable segment. |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09 regarding ASC Topic 606, Revenue from Contracts with Customers. This standard was developed to enable financial statement users to better understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The update's core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities are to use a five-step contract review model to ensure revenue is recognized, measured and disclosed in accordance with this principle. Those steps include the following: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to each performance obligation in the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Management has concluded that all of the Company's material revenue streams fall outside of the scope of this guidance. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. During 2018, the Company selected the modified retrospective transition method as of the date of adoption effective January 1, 2018. Management has concluded that the majority of total revenues consist of rental income from leasing arrangements, which are specifically excluded from the standard. The Company analyzed its remaining revenue streams, inclusive of gains and losses on real estate sales, and concluded there are no changes in revenue recognition with the adoption of the new standard. As such, adoption of the standard did not result in a cumulative adjustment recognized as of January 1, 2018, and the standard did not have a material impact on the Company's financial statements. In January 2017, the FASB issued ASU 2017-01, which clarifies the definition of a business by adding guidance to assist entities in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted, and is required to be applied prospectively to any transactions occurring within the period of adoption. We expect the new standard will result in all of our real estate acquisitions being considered asset acquisitions, whereby substantially all acquisition costs related to our real estate acquisitions will be capitalized. Prior to the adoption of the new standard, all of our real estate acquisitions completed after January 1, 2009, were considered acquisitions of businesses, whereby all acquisition-related costs were expensed as incurred. During 2018, the Company has adopted the accounting pronouncement effective January 1, 2018, and applied this guidance prospectively. The adoption did not have a material effect on the Company's financial statements. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements for the analysis of members' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of members' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company anticipates its first presentation of year-to-date quarterly changes in members' equity will be included in its Form 10Q for the quarter ended March 31, 2019. In February 2016, the FASB issued ASU 2016-02, which provides guidance for accounting for leases. The new guidance requires companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The accounting guidance for lessors is largely unchanged. The ASU is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. It is to be adopted using a modified retrospective approach. Management is currently evaluating the impact the adoption of this guidance will have on the Company's financial statements and does not expect this guidance will have a material impact on the financial statements given the nature of the leases held by the Company. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions [Table Text Block] | Related Party Transactions 2018 2017 AEI is reimbursed for costs incurred in providing services related to managing the Company’s operations and properties, maintaining the Company’s books, and communicating with the Limited Members. $ 138,370 $ 144,461 AEI is reimbursed for all direct expenses it paid on the Company’s behalf to third parties related to Company administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. $ 151,049 $ 119,101 |
Real Estate Investments (Tables
Real Estate Investments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Real Estate [Abstract] | |
Property, Plant and Equipment [Table Text Block] | Properties not held for sale Property Land Buildings Total Accumulated Depreciation Biomat USA Plasma Center, Wichita, KS $ 507,489 $ 1,277,436 $ 1,784,925 $ 728,461 Advance Auto Parts, Middletown, OH 112,315 909,974 1,022,289 458,024 Cellular Connection, Bluffton, IN 344,008 836,108 1,180,116 373,596 Best Buy, Eau Claire, WI 474,137 1,547,025 2,021,162 675,531 Dick’s Sporting Goods, Fredericksburg, VA 1,053,836 1,241,794 2,295,630 702,630 Fresenius Medical Center, Chicago, IL 464,400 665,142 1,129,542 106,418 Zales, Enid, OK 440,000 903,630 1,343,630 137,047 Dollar Tree, West Point, MS 270,000 1,316,232 1,586,232 153,558 $ 3,666,185 $ 8,697,341 $ 12,363,526 $ 3,335,265 |
Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block] | Acquired lease intangibles not held for sale 2018 2017 Cost Accumulated Amortization Cost Accumulated Amortization In-Place Lease Intangibles (weighted average life of 85 and 97 months, respectively) $ 633,712 $ 196,500 $ 633,712 $ 136,879 Above-Market Lease Intangibles (weighted average life of 70 and 82 months, respectively) 72,606 28,410 72,606 20,834 Acquired Intangible Lease Assets $ 706,318 $ 224,910 $ 706,318 $ 157,713 Acquired Below-Market Lease Intangibles (weighted average life of 81 and 93 months, respectively) $ 283,495 $ 83,820 $ 283,495 $ 54,236 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Minimum future rent 2019 $ 714,367 2020 660,207 2021 664,650 2022 673,025 2023 497,502 Thereafter 1,135,177 $ 4,344,928 |
Major Tenants (Tables)
Major Tenants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Policy Text Block [Abstract] | |
Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block] | Major Tenants Tenants 2018 2017 Dick’s Sporting Goods, Inc. $ 232,950 $ 232,950 Best Buy Stores, L.P. 156,662 149,334 Dollar Tree Stores, Inc. 137,084 137,084 Apple Indiana II LLC 103,184 103,184 Zale Delaware Inc. 98,024 98,024 Aggregate rental income of major tenants $ 727,904 $ 720,576 Aggregate rental income of major tenants as a percentage of total rental income 76% 76% |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule Of GAAP To Federal Taxable Income | Reconciliation of net income for financial reporting 2018 2017 Net Income (Loss) for Financial Reporting Purposes $ (615,629) $ 228,997 Depreciation for Tax Purposes Under Depreciation and Amortization for Financial Reporting Purposes 134,269 128,943 Real Estate Impairment Loss Not Recognized for Tax Purposes 830,973 0 Taxable Income to Members $ 349,613 $ 357,940 |
Schedule Of GAAP To Federal Tax Basis | Reconciliation of Members’ Equity for financial reporting 2018 2017 Members’ Equity for Financial Reporting Purposes $ 10,360,462 $ 11,655,674 Adjusted Tax Basis of Investments in Real Estate Over Net Investments in Real Estate for Financial Reporting Purposes 2,592,175 1,626,933 Income Accrued for Tax Purposes Over Income for Financial Reporting Purposes 19,366 19,366 Syndication Costs Treated as Reduction of Capital For Financial Reporting Purposes 2,691,997 2,691,997 Members’ Equity for Tax Reporting Purposes $ 15,664,000 $ 15,993,970 |
Organization (Details)
Organization (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 19, 2007 | Apr. 03, 2006 |
Limited Member [Member] | |||||
Organization (Details) [Line Items] | |||||
Capital Units, Value | $ 10 | ||||
Limited Partners' Capital Account, Units Outstanding (in Shares) | 1,738,006 | 1,738,006 | 1,744,006 | 1,832,736 | 150,000 |
Limited Partners' Contributed Capital | $ 18,327,360 | $ 1,500,000 | |||
Managing Member [Member] | |||||
Organization (Details) [Line Items] | |||||
General Partners' Contributed Capital | $ 1,000 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) - Dicks Sporting Goods Fredericksburg VA | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Property, Plant and Equipment, Gross | $ 2,423,973 | $ 2,423,973 |
Property, Plant, and Equipment, Fair Value Disclosure | 1,593,000 | 1,593,000 |
Impairment of Real Estate | $ 830,973 | $ 830,973 |
Related Party Transactions (Det
Related Party Transactions (Details) - Related Party Transactions - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
AEI is reimbursed for costs incurred in providing services related to managing the Company’s operations and properties, maintaining the Company’s books, and communicating with the Limited Members. | $ 138,370 | $ 144,461 |
AEI is reimbursed for all direct expenses it paid on the Company’s behalf to third parties related to Company administration and property management. These expenses included printing costs, legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. | $ 151,049 | $ 119,101 |
Real Estate Investments (Detail
Real Estate Investments (Details) - USD ($) | Dec. 31, 2017 | Apr. 01, 2017 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2019 | Jun. 17, 2019 | Dec. 31, 2018 | Sep. 21, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Real Estate Investments (Details) [Line Items] | ||||||||||
Depreciation, Nonproduction | $ 400,732 | $ 396,640 | ||||||||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $ 62,108 | |||||||||
Distributions Per Limited Partnership Unit Outstanding, Basic (in Dollars per share) | $ 0.0527 | $ 0.0949 | ||||||||
Impairment of Real Estate | $ 830,973 | 0 | ||||||||
Biomat USA Plasma Center Wichita KS | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Average Lease Term | On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property. | |||||||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 37,071 | |||||||||
Cost of Property Repairs and Maintenance | $ 54,219 | |||||||||
Payments for Lease Commissions | $ 54,293 | |||||||||
Cellular Connection Bluffton IN | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Payments for Tenant Improvements | $ 30,000 | |||||||||
Average Lease Term | Effective April 1, 2017, the Company entered into a lease agreement with a primary term of six years with The Cellular Connection LLC, a cell phone retailer that was subleasing the property from Starbucks Corporation. | |||||||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 39,156 | |||||||||
Leases, Acquired-in-Place [Member] | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Amortization of Intangible Assets | 59,621 | 56,680 | ||||||||
Above Market Leases [Member] | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Amortization of above and below Market Leases | 7,576 | 7,576 | ||||||||
$ 7,576 | ||||||||||
Off Market Unfavorable Lease Member | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Amortization of Below Market Lease | 29,584 | $ 29,584 | ||||||||
Below Market Lease, Amortization Income, Next Twelve Months | $ 29,584 | |||||||||
Applebees Crawfordsville IN | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Property, Plant and Equipment, Gross | $ 805,570 | 805,570 | ||||||||
Cellular Connection Bluffton IN | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Payments for Tenant Improvements | $ 30,000 | |||||||||
Dicks Sporting Goods Fredericksburg VA | ||||||||||
Real Estate Investments (Details) [Line Items] | ||||||||||
Impairment of Real Estate | 830,973 | 830,973 | ||||||||
Property, Plant and Equipment, Gross | 2,423,973 | 2,423,973 | ||||||||
Property, Plant, and Equipment, Fair Value Disclosure | $ 1,593,000 | $ 1,593,000 |
Real Estate Investments (Deta_2
Real Estate Investments (Details) - Real Estate Held for Investment | Dec. 31, 2018USD ($) |
Property, Plant and Equipment [Line Items] | |
Land | $ 3,666,185 |
Buildings | 8,697,341 |
Total | 12,363,526 |
Accumulated Depreciation | 3,335,265 |
Biomat USA Plasma Center Wichita KS | |
Property, Plant and Equipment [Line Items] | |
Land | 507,489 |
Buildings | 1,277,436 |
Total | 1,784,925 |
Accumulated Depreciation | 728,461 |
Advance Auto Parts Middletown OH | |
Property, Plant and Equipment [Line Items] | |
Land | 112,315 |
Buildings | 909,974 |
Total | 1,022,289 |
Accumulated Depreciation | 458,024 |
Cellular Connection Bluffton IN | |
Property, Plant and Equipment [Line Items] | |
Land | 344,008 |
Buildings | 836,108 |
Total | 1,180,116 |
Accumulated Depreciation | 373,596 |
Best Buy Eau Claire WI | |
Property, Plant and Equipment [Line Items] | |
Land | 474,137 |
Buildings | 1,547,025 |
Total | 2,021,162 |
Accumulated Depreciation | 675,531 |
Dicks Sporting Goods Fredericksburg VA | |
Property, Plant and Equipment [Line Items] | |
Land | 1,053,836 |
Buildings | 1,241,794 |
Total | 2,295,630 |
Accumulated Depreciation | 702,630 |
Fresenius Medical Center Chicago IL | |
Property, Plant and Equipment [Line Items] | |
Land | 464,400 |
Buildings | 665,142 |
Total | 1,129,542 |
Accumulated Depreciation | 106,418 |
Zales Enid OK | |
Property, Plant and Equipment [Line Items] | |
Land | 440,000 |
Buildings | 903,630 |
Total | 1,343,630 |
Accumulated Depreciation | 137,047 |
Dollar Tree West Point MS | |
Property, Plant and Equipment [Line Items] | |
Land | 270,000 |
Buildings | 1,316,232 |
Total | 1,586,232 |
Accumulated Depreciation | $ 153,558 |
Real Estate Investments (Deta_3
Real Estate Investments (Details) - Acquired Lease Intangibles - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Leases, Acquired-in-Place [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 633,712 | $ 633,712 |
Lease Intangibles Accumulated Amortization | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | 196,500 | 136,879 |
Accumulated Amortization | 28,410 | 20,834 |
Accumulated Amortization | 224,910 | 157,713 |
Accumulated Amortization | 83,820 | 54,236 |
Above Market Leases [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | 72,606 | 72,606 |
Cost | 706,318 | 706,318 |
Off Market Unfavorable Lease Member | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 283,495 | $ 283,495 |
Real Estate Investments (Deta_4
Real Estate Investments (Details) - Acquired Lease Intangibles (Parentheticals) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Leases, Acquired-in-Place [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average life | 85 months | 97 months |
Above Market Leases [Member] | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average life | 70 months | 82 months |
Off Market Unfavorable Lease Member | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average life | 81 months | 93 months |
Real Estate Investments (Deta_5
Real Estate Investments (Details) - Future Minimum Rent - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Future Minimum Rent [Abstract] | |||||
2019 | $ 714,367 | ||||
2020 | $ 660,207 | ||||
2021 | $ 664,650 | ||||
2022 | $ 673,025 | ||||
2023 | $ 497,502 | ||||
Thereafter | 1,135,177 | ||||
$ 4,344,928 |
Major Tenants (Details) - Major
Major Tenants (Details) - Major Tenants - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue, Major Customer [Line Items] | ||
Major Tenants | $ 727,904 | $ 720,576 |
Aggregate rental income of major tenants as a percentage of total rental income | 76.00% | 76.00% |
Dicks Sporting Goods Inc | ||
Revenue, Major Customer [Line Items] | ||
Major Tenants | $ 232,950 | $ 232,950 |
Best Buy Stores LP | ||
Revenue, Major Customer [Line Items] | ||
Major Tenants | 156,662 | 149,334 |
Dollar Tree Stores Inc | ||
Revenue, Major Customer [Line Items] | ||
Major Tenants | 137,084 | 137,084 |
Apple Indiana II LLC | ||
Revenue, Major Customer [Line Items] | ||
Major Tenants | 103,184 | 103,184 |
Zales Delaware Inc | ||
Revenue, Major Customer [Line Items] | ||
Major Tenants | $ 98,024 | $ 98,024 |
Members' Equity (Details)
Members' Equity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Members' Equity (Details) [Line Items] | |||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | $ 679,583 | $ 679,998 | |
Distributions Per Limited Partnership Unit Outstanding, Basic (in Dollars per share) | $ 0.0527 | $ 0.0949 | |
SaleProceedsDistributionMadeToMemberOrLimitedPartner | $ 40,404 | 20,202 | |
Partners' Capital Account, Redemptions | 37,456 | ||
Limited Member [Member] | |||
Members' Equity (Details) [Line Items] | |||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | $ 660,004 | $ 660,002 | |
Distributions Per Limited Partnership Unit Outstanding, Basic (in Dollars per share) | $ 0.38 | $ 0.38 | |
Weighted Average Limited Partnership Units Outstanding, Basic (in Shares) | 1,738,006 | 1,739,506 | |
DistributionsPerUnitOfNetIncome (in Dollars per Share) | 0.12 | 0.11 | |
DistributionsPerUnitOfReturnOfCapital (in Dollars per Share) | 0.26 | 0.27 | |
SaleProceedsDistributionMadeToMemberOrLimitedPartner | $ 40,000 | $ 20,000 | |
SaleProceedsDistributionMadetomLimitedMemberPerUnit | 0.02 | $ 0.01 | |
Partners' Capital Account, Units, Redeemed (in Shares) | 6,000 | ||
Partners' Capital Account, Redemptions | $ 36,332 | ||
Managing Member [Member] | |||
Members' Equity (Details) [Line Items] | |||
Distribution Made to Limited Liability Company (LLC) Member, Cash Distributions Declared | 19,579 | 19,996 | |
SaleProceedsDistributionMadeToMemberOrLimitedPartner | $ 404 | 202 | |
Partners' Capital Account, Redemptions | $ 1,124 |
Income Taxes (Details) - Federa
Income Taxes (Details) - Federal Taxable Income Reconciliation - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Federal Taxable Income Reconciliation [Abstract] | ||
Net Income (Loss) for Financial Reporting Purposes | $ (615,629) | $ 228,997 |
Depreciation for Tax Purposes Under Depreciation and Amortization for Financial Reporting Purposes | 134,269 | 128,943 |
Real Estate Impairment Loss Not Recognized for Tax Purposes | 830,973 | 0 |
Taxable Income to Members | $ 349,613 | $ 357,940 |
Income Taxes (Details) - Fede_2
Income Taxes (Details) - Federal Tax Members' Equity - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Federal Tax Members' Equity [Abstract] | ||
Members’ Equity for Financial Reporting Purposes | $ 10,360,462 | $ 11,655,674 |
Adjusted Tax Basis of Investments in Real Estate Over Net Investments in Real Estate for Financial Reporting Purposes | 2,592,175 | 1,626,933 |
Income Accrued for Tax Purposes Over Income for Financial Reporting Purposes | 19,366 | 19,366 |
Syndication Costs Treated as Reduction of Capital For Financial Reporting Purposes | 2,691,997 | 2,691,997 |
Members’ Equity for Tax Reporting Purposes | $ 15,664,000 | $ 15,993,970 |