UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2011
Commission File Number: 000-29274
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
State of Minnesota 41-1789725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
(Address of principal executive offices)
(651) 227-7333
(Registrant's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (232.405 of this chapter)
during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited):
Balance Sheet as of March 31, 2011 and December 31, 2010
Statements for the Three Months ended March 31, 2011 and 2010:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 5. Other Information
Item 6. Exhibits
Signatures
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
BALANCE SHEET
MARCH 31, 2011 AND DECEMBER 31, 2010
ASSETS
2011 2010
CURRENT ASSETS:
Cash $ 1,458,724 $ 514,889
INVESTMENTS IN REAL ESTATE:
Land 4,413,700 4,413,700
Buildings and Equipment 12,286,382 12,286,382
Accumulated Depreciation (2,079,749) (1,956,885)
----------- -----------
14,620,333 14,743,197
Real Estate Held for Sale 785,099 1,328,815
----------- -----------
Net Investments in Real Estate 15,405,432 16,072,012
----------- -----------
Total Assets $16,864,156 $16,586,901
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 23,926 $ 24,527
Distributions Payable 293,938 294,949
Unearned Rent 62,820 27,010
----------- -----------
Total Current Liabilities 380,684 346,486
----------- -----------
PARTNERS' CAPITAL:
General Partners 5,044 2,613
Limited Partners, $1,000 per Unit;
24,000 Units authorized and issued;
22,674 Units outstanding 16,478,428 16,237,802
----------- -----------
Total Partners' Capital 16,483,472 16,240,415
----------- -----------
Total Liabilities and Partners' Capital $16,864,156 $16,586,901
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31
2011 2010
RENTAL INCOME $ 326,135 $ 296,336
EXPENSES:
Partnership Administration - Affiliates 56,798 56,694
Partnership Administration and Property
Management - Unrelated Parties 12,274 11,928
Depreciation 122,864 111,434
----------- -----------
Total Expenses 191,936 180,056
----------- -----------
OPERATING INCOME 134,199 116,280
OTHER INCOME:
Interest Income 1,088 2,374
----------- -----------
INCOME FROM CONTINUING OPERATIONS 135,287 118,654
Income from Discontinued Operations 401,708 117,140
----------- -----------
NET INCOME $ 536,995 $ 235,794
=========== ===========
NET INCOME ALLOCATED:
General Partners $ 5,370 $ 2,500
Limited Partners 531,625 233,294
----------- -----------
$ 536,995 $ 235,794
=========== ===========
INCOME PER LIMITED PARTNERSHIP UNIT:
Continuing Operations $ 5.91 $ 5.16
Discontinued Operations 17.54 5.08
----------- -----------
Total $ 23.45 $ 10.24
=========== ===========
Weighted Average Units Outstanding - Basic and Diluted 22,674 22,779
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 536,995 $ 235,794
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 122,864 111,479
Gain on Sale of Real Estate (366,278) (75,134)
Decrease in Receivables 0 9,325
Decrease in Payable to
AEI Fund Management, Inc. (601) (7,877)
Increase in Unearned Rent 35,810 28,040
----------- -----------
Total Adjustments (208,205) 65,833
----------- -----------
Net Cash Provided By
Operating Activities 328,790 301,627
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Real Estate 909,994 648,999
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions Paid to Partners (294,949) (294,947)
----------- -----------
NET INCREASE IN CASH 943,835 655,679
CASH, beginning of period 514,889 1,008,743
----------- -----------
CASH, end of period $ 1,458,724 $ 1,664,422
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 2009 $ 1,319 $16,565,712 $16,567,031 22,779.11
Distributions Declared (2,950) (291,998) (294,948)
Net Income 2,500 233,294 235,794
-------- ----------- ----------- ----------
BALANCE, March 31, 2010 $ 869 $16,507,008 $16,507,877 22,779.11
======== =========== =========== ==========
BALANCE, December 31, 2010 $ 2,613 $16,237,802 $16,240,415 22,673.61
Distributions Declared (2,939) (290,999) (293,938)
Net Income 5,370 531,625 536,995
-------- ----------- ----------- ----------
BALANCE, March 31, 2011 $ 5,044 $16,478,428 $16,483,472 22,673.61
======== =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2011
(1) The condensed statements included herein have been prepared
by the registrant, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the registrant
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
registrant's latest annual report on Form 10-K.
(2) Organization -
AEI Income & Growth Fund XXI Limited Partnership
("Partnership") was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XXI, Inc.
("AFM"), the Managing General Partner. Robert P. Johnson,
the President and sole director of AFM, serves as the
Individual General Partner. 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 Partnership.
The terms of the Partnership offering called for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on April 14, 1995 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. On January 31, 1997, the
offering terminated when the maximum subscription limit of
24,000 Limited Partnership Units 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 operations, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of 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
10% 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 property, will be
allocated first in the same ratio in which, and to the
extent, Net Cash Flow is distributed to the Partners for
such year. Any additional profits will be allocated in the
same ratio as the last dollar of Net Cash Flow is
distributed. Net losses from operations will be allocated
99% to the Limited Partners and 1% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of 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 10% 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.
(3) Reclassification -
Certain items related to discontinued operations in the
prior year's financial statements have been reclassified to
conform to 2011 presentation. These reclassifications had
no effect on Partners' capital, net income or cash flows.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Investments in Real Estate -
On October 20, 2010, the Partnership purchased a 39%
interest in a Scott & White Clinic in College Station, Texas
for $1,433,468. The Partnership incurred $31,422 of
acquisition expenses related to the purchase that were
expensed. The property is leased to Scott & White
Healthcare under a Lease Agreement with a remaining primary
term of 9.7 years (as of the date of purchase) and initial
annual rent of $120,120 for the interest purchased. The
remaining interests in the property were purchased by AEI
Net Lease Income & Growth Fund XX Limited Partnership and
AEI Income & Growth Fund 25 LLC, affiliates of the
Partnership.
(5) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
(6) Discontinued Operations -
During 2010, the Partnership sold 33.6699% of the KinderCare
daycare center in Ballwin, Missouri, in three separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $674,196, which resulted
in a net gain of $265,907. The cost and related accumulated
depreciation of the interests sold was $511,034 and
$102,745, respectively. For the three months ended March
31, 2010, the net gain was $87,118.
On March 25, 2011, the Partnership sold its remaining
44.5116% interest in the KinderCare daycare center in
Ballwin, Missouri, in two separate transactions, to
unrelated third parties. The Partnership received total net
sale proceeds of $902,133, which resulted in a net gain of
$362,374. The cost and related accumulated depreciation of
the interests sold was $675,587 and $135,828, respectively.
At December 31, 2010, the property was classified as Real
Estate Held for Sale with a carrying value of $539,759.
In December 2009, the Partnership entered into an agreement
to sell the Tumbleweed restaurant in Fort Wayne, Indiana to
an unrelated third party. On March 12, 2010, the sale
closed with the Partnership receiving net sale proceeds of
$428,016, which resulted in a net loss of $11,984. At the
time of sale, the cost and related accumulated depreciation
was $727,476 and $287,476, respectively.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Discontinued Operations - (Continued)
On January 19, 2011, the Partnership sold its remaining
.1534% interest in the Champps Americana restaurant in
Livonia, Michigan to an unrelated third party. The
Partnership received net sale proceeds of $7,861, which
resulted in a net gain of $3,904. The cost and related
accumulated depreciation of the interest sold was $6,366 and
$2,409, respectively. At December 31, 2010, the property
was classified as Real Estate Held for Sale with a carrying
value of $3,957.
The Partnership is attempting to sell its 20.4025% interest
in the Winn-Dixie store in Panama City, Florida. At March
31, 2011 and December 31, 2010, the property was classified
as Real Estate Held for Sale with a carrying value of
$785,099.
During the first three months of 2010, the Partnership
distributed net sale proceeds of $22,808 to the Limited and
General Partners as part of their quarterly distributions,
which represented a return of capital of $0.99 per Limited
Partnership Unit. The Partnership anticipates the remaining
net sale proceeds will either be reinvested in additional
property or distributed to the Partners in the future.
The financial results for these properties are reflected as
Discontinued Operations in the accompanying financial
statements. The following are the results of discontinued
operations for the three months ended March 31:
2011 2010
Rental Income $ 35,430 $ 50,121
Property Management Expenses 0 (8,070)
Depreciation 0 (45)
Gain on Disposal of Real Estate 366,278 75,134
--------- ---------
Income from Discontinued Operations $ 401,708 $ 117,140
========= =========
(7) Fair Value Measurements -
As of March 31, 2011, the Partnership had no assets or
liabilities measured at fair value on a recurring basis or
nonrecurring basis.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
This section contains "forward-looking statements" 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, the
sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward-
looking statements, should 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:
Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
effects of these consequences for the Partners;
resolution by the General Partners of conflicts with
which they may be confronted;
the success of the General Partners of locating
properties with favorable risk return characteristics;
the effect of tenant defaults; and
the condition of the industries in which the tenants of
properties owned by the Partnership operate.
Application of Critical Accounting Policies
The preparation of the Partnership's financial statements
requires management to make estimates and assumptions that may
affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. Management evaluates these estimates on an ongoing
basis, including those related to the carrying value of
investments in real estate and the allocation by AEI Fund
Management, Inc. of expenses to the Partnership as opposed to
other funds they manage.
The Partnership purchases properties and records them in
the financial statements at cost (not including acquisition
expenses). The Partnership tests long-lived assets for
recoverability when events or changes in circumstances indicate
that the carrying value may not be recoverable. For properties
the Partnership will hold and operate, management determines
whether impairment has occurred by comparing the property's
probability-weighted future undiscounted cash flows to its
current carrying value. For properties held for sale, management
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.
Changes in these assumptions or analysis may cause material
changes in the carrying value of the properties.
AEI Fund Management, Inc. allocates expenses to each of
the funds they manage primarily on the basis of the number of
hours devoted by their employees to each fund's affairs. They
also allocate expenses at the end of each month that are not
directly related to a fund's operations based upon the number of
investors in the fund and the fund's capitalization relative to
other funds they manage. The Partnership reimburses these
expenses subject to detailed limitations contained in the
Partnership Agreement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Management of the Partnership has discussed the
development and selection of the above accounting estimates and
the management discussion and analysis disclosures regarding them
with the managing partner of the Partnership.
Results of Operations
For the three months ended March 31, 2011 and 2010, the
Partnership recognized rental income from continuing operations
of $326,135 and $296,336, respectively. In 2011, rental income
increased mainly due to additional rent received from one
property acquisition in 2010. Based on the scheduled rent for
the properties owned as of April 30, 2011, the Partnership
expects to recognize rental income from continuing operations of
approximately $1,312,000 in 2011.
For the three months ended March 31, 2011 and 2010, the
Partnership incurred Partnership administration expenses from
affiliated parties of $56,798 and $56,694, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and communication with the Limited Partners. During
the same periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $12,274 and $11,928, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit costs, taxes,
insurance and other property costs.
For the three months ended March 31, 2011 and 2010, the
Partnership recognized interest income of $1,088 and $2,374,
respectively. In 2011, interest income decreased primarily due
to the Partnership having less money invested in a money market
account due to a property acquisition in October 2010.
Upon complete disposal of a property or classification of
a property as Real Estate Held for Sale, the Partnership includes
the operating results and sale of the property in discontinued
operations. In addition, the Partnership reclassifies the prior
periods' operating results of the property to discontinued
operations. For the three months ended March 31, 2011, the
Partnership recognized income from discontinued operations of
$401,708, representing rental income of $35,430 and a gain on
disposal of real estate of $366,278. For the three months ended
March 31, 2010, the Partnership recognized income from
discontinued operations of $117,140, representing rental income
less property management expenses and depreciation of $42,006 and
a gain on disposal of real estate of $75,134.
During 2010, the Partnership sold 33.6699% of the
KinderCare daycare center in Ballwin, Missouri, in three separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $674,196, which resulted in a
net gain of $265,907. The cost and related accumulated
depreciation of the interests sold was $511,034 and $102,745,
respectively. For the three months ended March 31, 2010, the net
gain was $87,118.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On March 25, 2011, the Partnership sold its remaining
44.5116% interest in the KinderCare daycare center in Ballwin,
Missouri, in two separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds of
$902,133, which resulted in a net gain of $362,374. The cost and
related accumulated depreciation of the interests sold was
$675,587 and $135,828, respectively. At December 31, 2010, the
property was classified as Real Estate Held for Sale with a
carrying value of $539,759.
In December 2009, the Partnership entered into an
agreement to sell the Tumbleweed restaurant in Fort Wayne,
Indiana to an unrelated third party. On March 12, 2010, the sale
closed with the Partnership receiving net sale proceeds of
$428,016, which resulted in a net loss of $11,984. At the time
of sale, the cost and related accumulated depreciation was
$727,476 and $287,476, respectively.
On January 19, 2011, the Partnership sold its remaining
..1534% interest in the Champps Americana restaurant in Livonia,
Michigan to an unrelated third party. The Partnership received
net sale proceeds of $7,861, which resulted in a net gain of
$3,904. The cost and related accumulated depreciation of the
interest sold was $6,366 and $2,409, respectively. At December
31, 2010, the property was classified as Real Estate Held for
Sale with a carrying value of $3,957.
The Partnership is attempting to sell its 20.4025%
interest in the Winn-Dixie store in Panama City, Florida. At
March 31, 2011 and December 31, 2010, the property was classified
as Real Estate Held for Sale with a carrying value of $785,099.
Management believes inflation has not significantly
affected income from operations. Leases may contain rent
increases, based on the increase in the Consumer Price Index over
a specified period, which will result in an increase in rental
income over the term of the leases. Inflation also may cause the
real estate to appreciate in value. However, inflation and
changing prices may have an adverse impact on the operating
margins of the properties' tenants, which could impair their
ability to pay rent and subsequently reduce the Net Cash Flow
available for distributions.
Liquidity and Capital Resources
During the three months ended March 31, 2011, the
Partnership's cash balances increased $943,835 as a result of
cash generated from the sale of property and cash generated from
operating activities in excess of distributions paid to the
Partners. During the three months ended March 31, 2010, the
Partnership's cash balances increased $655,679 as a result of
cash generated from the sale of property and cash generated from
operating activities in excess of distributions paid to the
Partners.
Net cash provided by operating activities increased from
$301,627 in 2010 to $328,790 in 2011 as a result of an increase
in total rental and interest income in 2011, a decrease in
Partnership administration and property management expenses in
2011 and net timing differences in the collection of payments
from the tenants and the payment of expenses.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the three months ended
March 31, 2011 and 2010, the Partnership generated cash flow from
the sale of real estate of $909,994 and $648,999, respectively.
On October 20, 2010, the Partnership purchased a 39%
interest in a Scott & White Clinic in College Station, Texas for
$1,433,468. The property is leased to Scott & White Healthcare
under a Lease Agreement with a remaining primary term of 9.7
years (as of the date of purchase) and initial annual rent of
$120,120 for the interest purchased. The remaining interests in
the property were purchased by AEI Net Lease Income & Growth Fund
XX Limited Partnership and AEI Income & Growth Fund 25 LLC,
affiliates of the Partnership.
The Partnership's primary use of cash flow, other than
investment in real estate, 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.
For the three months ended March 31, 2011 and 2010, the
Partnership declared distributions of $293,938 and $294,948,
respectively, which were distributed 99% to the Limited Partners
and 1% to the General Partners. The Limited Partners received
distributions of $290,999 and $291,998 and the General Partners
received distributions of $2,939 and $2,950 for the periods,
respectively.
During the first three months of 2010, the Partnership
distributed net sale proceeds of $22,808 to the Limited and
General Partners as part of their quarterly distributions, which
represented a return of capital of $0.99 per Limited Partnership
Unit. The Partnership anticipates the remaining net sale
proceeds will either be reinvested in additional property or
distributed to the Partners in the future.
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 will not be obligated
to purchase in any year any number of Units that, when aggregated
with all other transfers of Units that have occurred since the
beginning of the same calendar year (excluding Permitted
Transfers as defined in the Partnership Agreement), would exceed
5% of the total number of Units outstanding on January 1 of such
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 the first three months of 2011, the Partnership did
not redeem any Units from the Limited Partners. On October 1,
2010, six Limited Partners redeemed a total of 105.5 Partnership
Units for $34,800 in accordance with the Partnership Agreement.
The Partnership acquired these Units using Net Cash Flow from
operations. In prior years, a total of 60 Limited Partners
redeemed 1,220.89 Partnership Units for $958,469. The
redemptions increase the remaining Limited Partners' ownership
interest in the Partnership. As a result of these redemption
payments and pursuant to the Partnership Agreement, the General
Partners received distributions of $351 in 2010.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The continuing rent payments from the properties, together
with cash generated from property sales, should be adequate to
fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
The Economy and Market Conditions
The impact of conditions in the current economy, including
the turmoil in the credit markets, has adversely affected many
real estate investment funds. However, the absence of mortgage
financing on the Partnership's properties eliminates the risks of
foreclosure and debt-refinancing that can negatively impact the
value and distributions of leveraged real estate investment
funds. Nevertheless, a prolonged economic downturn may adversely
affect the operations of the Partnership's tenants and their cash
flows. If a tenant were to default on its lease obligations, the
Partnership's income would decrease, its distributions would
likely be reduced and the value of its properties might decline.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Disclosure Controls and Procedures.
Under the supervision and with the participation of
management, including its President and Chief Financial Officer,
the Managing General Partner of the Partnership evaluated the
effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based
upon that evaluation, the President and Chief Financial Officer
of the Managing General Partner concluded that, as of the end of
the period covered by this report, our disclosure controls and
procedures were effective in ensuring that information required
to be disclosed by us in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in applicable rules and forms
and that such information is accumulated and communicated to
management, including the President and Chief Financial Officer
of the Managing General Partner, in a manner that allows timely
decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting.
During the most recent period covered by this report,
there has been no change in our internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange Act)
that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's property
is subject.
ITEM 1A. RISK FACTORS.
Not required for a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
(a) None.
(b) Not applicable.
(c) Pursuant to Section 7.7 of the Partnership Agreement,
each Limited Partner has the right to present Units to the
Partnership for purchase by submitting notice to the Managing
General Partner during September of each year. The purchase
price of the Units is based on a formula specified in the
Partnership Agreement. Units tendered to the Partnership are
redeemed on October 1st of each year subject to the following
limitations. The Partnership will not be obligated to purchase
in any year any number of Units that, when aggregated with all
other transfers of Units that have occurred since the beginning
of the same calendar year (excluding Permitted Transfers as
defined in the Partnership Agreement), would exceed 5% of the
total number of Units outstanding on January 1 of such 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 the period covered by this report, the
Partnership did not purchase any Units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
31.1 Certification of Chief Executive Officer of General
Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer of General
Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief
Financial Officer of General Partner pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements 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.
Dated: May 12, 2011 AEI Income & Growth Fund XXI
Limited Partnership
By: AEI Fund Management XXI, Inc.
Its: Managing General Partner
By: /s/ ROBERT P JOHNSON
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ PATRICK W KEENE
Patrick W. Keene
Chief Financial Officer
(Principal Accounting Officer)