UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: March 31, 2003
Commission file number: 24003
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
___State of Minnesota____ __41-1848181__
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
_____________(651) 227-7333_____________
(Issuer's telephone number)
____________Not Applicable___________
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes __X__ No _____
Transitional Small Business Disclosure Format:
Yes _____ No __X__
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Balance Sheet as of March 31, 2003
and December 31, 2002 3
Statements for the Periods ended
March 31, 2003 and 2002:
Income 4
Cash Flows 5
Changes in Partners' Capital 6
Notes to Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis 10 - 13
Item 3. Controls and Procedures 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a
Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 15
Certifications 16-17
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
BALANCE SHEET
MARCH 31, 2003 AND DECEMBER 31, 2002
(Unaudited)
ASSETS
2003 2002
CURRENT ASSETS:
Cash and Cash Equivalents $3,338,964 $2,108,482
Receivables 18,552 3,563
-------- --------
3,357,516 2,112,045
-------- --------
INVESTMENTS IN REAL ESTATE:
Land 4,025,679 4,684,762
Buildings and Equipment 6,230,544 6,883,098
Construction in Progress 226,009 3,687
Accumulated Depreciation (895,996) (938,819)
-------- --------
Net Investments in Real Estate 9,586,236 10,632,728
-------- --------
Total Assets $12,943,752 $12,744,773
========= =========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 56,764 $ 11,613
Distributions Payable 287,113 287,113
Unearned Rent 8,343 0
-------- --------
Total Current Liabilities 352,220 298,726
-------- --------
PARTNERS' CAPITAL (DEFICIT):
General Partners 3,610 3,792
Limited Partners, $1,000 Unit Value;
24,000 Units authorized; 16,917 Units issued;
16,516 Units outstanding 12,587,922 12,442,255
-------- --------
Total Partners' Capital 12,591,532 12,446,047
-------- --------
Total Liabilities and
Partners' Capital $12,943,752 $12,744,773
========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
2003 2002
INCOME:
Rent $ 264,717 $ 306,499
Investment Income 8,954 2,779
-------- --------
Total Income 273,671 309,278
-------- --------
EXPENSES:
Partnership Administration - Affiliates 52,148 51,799
Partnership Administration and Property
Management - Unrelated Parties 12,826 9,811
Depreciation 69,410 84,335
-------- --------
Total Expenses 134,384 145,945
-------- --------
OPERATING INCOME 139,287 163,333
GAIN ON SALE OF REAL ESTATE 298,050 0
-------- --------
NET INCOME $ 437,337 $ 163,333
======= =======
NET INCOME ALLOCATED:
General Partners $ 7,160 $ 4,900
Limited Partners 430,177 158,433
-------- --------
$ 437,337 $ 163,333
======= =======
NET INCOME PER LIMITED PARTNERSHIP UNIT
(16,516 and 16,557 weighted average
Units outstanding in 2003 and 2002,
respectively) $ 26.05 $ 9.57
======= =======
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 437,337 $ 163,333
Adjustments To Reconcile Net Income To Net
Cash Provided By Operating Activities:
Depreciation 69,410 84,335
Gain on Sale of Real Estate (298,050) 0
Increase in Receivables (14,989) 0
Increase (Decrease) in Payable to
AEI Fund Management, Inc. 45,151 (38,965)
Increase in Unearned Rent 8,343 8,343
-------- --------
Total Adjustments (190,135) 53,713
-------- --------
Net Cash Provided By
Operating Activities 247,202 217,046
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (224,354) 0
Proceeds from Sale of Real Estate 1,499,486 0
-------- --------
Net Cash Provided By
Investing Activities 1,275,132 0
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 0 248
Distributions to Partners (291,852) (295,657)
-------- --------
Net Cash Used For
Financing Activities (291,852) (295,409)
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,230,482 (78,363)
CASH AND CASH EQUIVALENTS,
beginning of period 2,108,482 880,350
-------- --------
CASH AND CASH EQUIVALENTS, end of period $3,338,964 $ 801,987
======== ========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 2001 $ 1,645 $12,585,494 $12,587,139 16,556.63
Distributions (8,870) (286,787) (295,657)
Net Income 4,900 158,433 163,333
-------- --------- --------- --------
BALANCE, March 31, 2002 $(2,325) $12,457,140 $12,454,815 16,556.63
======== ========= ========= ========
BALANCE, December 31, 2002 $ 3,792 $12,442,255 $12,446,047 16,516.29
Distributions (7,342) (284,510) (291,852)
Net Income 7,160 430,177 437,337
-------- --------- --------- --------
BALANCE, March 31, 2003 $ 3,610 $12,587,922 $12,591,532 16,516.29
======== ========= ========= ========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
(1)The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) ORGANIZATION -
AEI Income & Growth Fund XXII 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 shareholder of AFM, serves as the
Individual General Partner and an affiliate of AFM, AEI Fund
Management, Inc. (AEI), performs the administrative and
operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on May 1, 1997 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The offering terminated January
9, 1999 when the extended offering period expired. The
Partnership received subscriptions for 16,917.222 Limited
Partnership Units. Under the terms of the Limited
Partnership Agreement, the Limited Partners and General
Partners contributed funds of $16,917,222 and $1,000,
respectively.
During operations, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
97% to the Limited Partners and 3% to the General Partners.
Distributions to Limited Partners will be made pro rata by
Units.
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 9%
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.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) ORGANIZATION - (Continued)
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 9% 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) INVESTMENTS IN REAL ESTATE -
On January 1, 2002, the Partnership owned 64.4916% of the
Hollywood Video store in Saraland, Alabama. In 2002, the
Partnership sold 61.4116% of the property, in two separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $896,350, which resulted
in a net gain of $120,988. The total cost and related
accumulated depreciation of the interests sold was $846,185
and $70,823, respectively. For the three months ended March
31, 2002, the net gain was $-0-.
Through December 31, 2002, the Partnership sold 38.0038% of
the Children's World in Golden, Colorado, in five separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $790,102, which resulted
in a net gain of $164,893. The total cost and related
accumulated depreciation of the interests sold was $638,318
and $13,109, respectively. For the three months ended March
31, 2002, the net gain was $-0-.
During 2002, the Partnership sold 39.1271% of the TGI
Friday's restaurant, in three separate transactions, to
unrelated third parties. The Partnership received total net
sale proceeds of $789,247, which resulted in a net gain of
$208,061. The total cost and related accumulated
depreciation of the interests sold was $653,564 and $72,378,
respectively. For the three months ended March 31, 2002,
the net gain was $-0-.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) INVESTMENTS IN REAL ESTATE - (Continued)
Through March 31, 2003, the Partnership sold 24.6846% of the
Children's World daycare center in Plainfield, Illinois, in
three separate transactions, to unrelated third parties.
The Partnership received total net sale proceeds of
$450,673, which resulted in a net gain of $103,162. The
total cost and related accumulated depreciation of the
interests sold was $363,531 and $16,020, respectively. For
the three months ended March 31, 2003 and 2002, the net gain
was $53,648 and $-0-, respectively.
During 2003, the Partnership sold 81.7389% of the Arby's
restaurant, in four separate transactions, to unrelated
third parties. The Partnership received total net sale
proceeds of $1,279,056, which resulted in a net gain of
$244,402. The total cost and related accumulated
depreciation of the interests sold was $1,138,290 and
$103,636, respectively.
Subsequent to March 31, 2003, the Partnership sold 85.4855%
of the Children's World daycare center in Houston, Texas, in
three separate transactions, to unrelated third parties.
The Partnership received net sale proceeds of approximately
$897,000, which resulted in a net gain of approximately
$233,000.
During the first three months of 2003, the Partnership
distributed $70,707 of net sale proceeds to the Limited and
General Partners as part of their regular quarterly
distributions which represented a return of capital of $4.24
per Limited Partnership Unit. The remaining net sale
proceeds will either be reinvested in additional property or
distributed to the Partners in the future.
On December 6, 2002, the Partnership purchased a 50%
interest in a parcel of land in West Chester, Ohio for
$475,256, including acquisition expenses. The land is
leased to Champps Operating Corporation (Champps) under a
Lease Agreement with a primary term of 20 years and annual
rental payments of $50,600. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
will advance funds to Champps for the construction of a
Champps Americana restaurant on the site. Through March 31,
2003, the Partnership had advanced $226,009 for the
construction of the property and was charging interest on
the advances at a rate of 10.0%. The Partnership's share of
the total purchase price, including the cost of the land,
will be approximately $1,750,000. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $175,000. The
remaining interest in the property is owned by AEI Net Lease
Income and Growth Fund XX Limited Partnership, an affiliate
of the Partnership.
(4) PAYABLE TO AEI FUND MANAGEMENT, INC. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
The Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of federal
securities laws which represent management's expectations or
beliefs concerning future events, including statements regarding
anticipated application of cash, expected returns from rental
income, growth in revenue, taxation levels, the sufficiency of
cash to meet operating expenses, rates of distribution, and other
matters. These, and other forward looking statements made by the
Partnership, must be evaluated in the context of a number of
factors that may affect the Partnership's financial condition and
results of operations, including the following:
- 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
affects 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.
The 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 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 the lower of cost or estimated
realizable value. The Partnership initially records the
properties at cost (including capitalized acquisition expenses).
The Partnership is required to periodically evaluate the carrying
value of properties to determine whether their realizable value
has declined. For properties the Partnership will hold and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted 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
realizable value, an impairment loss is recorded to reduce the
carrying value of the property to its realizable value. A change
in these assumptions or analysis could 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 some 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, 2003 and 2002, the
Partnership recognized rental income of $264,717 and $306,499,
respectively. During the same periods, the Partnership earned
investment income of $8,954 and $2,779, respectively. In 2003,
rental income decreased due to property sales. This decrease in
rental income was partially offset by additional rent received
from one property acquisition in 2002, and rent increases on two
properties. In 2003, investment income increased due to the
Partnership receiving interest income from construction advances
and having more money invested in a money market account due to
property sales.
During the three months ended March 31, 2003 and 2002, the
Partnership paid Partnership administration expenses to
affiliated parties of $52,148 and $51,799, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $12,826 and $9,811, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs.
As of March 31, 2003, the Partnership's annualized cash
distribution rate was 7.0%, based on the Adjusted Capital
Contribution. Pursuant to the Partnership Agreement,
distributions of Net Cash Flow were allocated 97% to the Limited
Partners and 3% to the General Partners.
Inflation has had a minimal effect on 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. In addition, leases may contain rent clauses
which entitle the Partnership to receive additional rent in
future years if gross receipts for the property exceed certain
specified amounts. Increases in sales volumes of the tenants,
due to inflation and real sales growth, may 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, 2003, the
Partnership's cash balances increased $1,230,482 as a result of
cash generated from the sale of property, which was partially
offset by cash used to purchase property and distributions paid
to the Partners in excess of cash generated from operating
activities. Net cash provided by operating activities increased
from $217,046 in 2002 to $247,202 in 2003 as a result of net
timing differences in the collection of payments from the lessees
and the payment of expenses, which were partially offset by a
decrease in income and an increase in Partnership administration
expenses in 2003.
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, 2003, the Partnership generated cash flow from the sale
of real estate of $1,499,486. During the same period, the
Partnership expended $224,354, to invest in real properties
(inclusive of acquisition expenses) as the Partnership reinvested
cash generated from property sales.
On January 1, 2002, the Partnership owned 64.4916% of the
Hollywood Video store in Saraland, Alabama. In 2002, the
Partnership sold 61.4116% of the property, in two separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $896,350, which resulted in a
net gain of $120,988. The total cost and related accumulated
depreciation of the interests sold was $846,185 and $70,823,
respectively. For the three months ended March 31, 2002, the net
gain was $-0-.
Through December 31, 2002, the Partnership sold 38.0038%
of the Children's World in Golden, Colorado, in five separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $790,102, which resulted in a
net gain of $164,893. The total cost and related accumulated
depreciation of the interests sold was $638,318 and $13,109,
respectively. For the three months ended March 31, 2002, the net
gain was $-0-.
During 2002, the Partnership sold 39.1271% of the TGI
Friday's restaurant, in three separate transactions, to unrelated
third parties. The Partnership received total net sale proceeds
of $789,247, which resulted in a net gain of $208,061. The
total cost and related accumulated depreciation of the interests
sold was $653,564 and $72,378, respectively. For the three
months ended March 31, 2002, the net gain was $-0-.
Through March 31, 2003, the Partnership sold 24.6846% of
the Children's World daycare center in Plainfield, Illinois, in
three separate transactions, to unrelated third parties. The
Partnership received total net sale proceeds of $450,673, which
resulted in a net gain of $103,162. The total cost and related
accumulated depreciation of the interests sold was $363,531 and
$16,020, respectively. For the three months ended March 31, 2003
and 2002, the net gain was $53,648 and $-0-, respectively.
During 2003, the Partnership sold 81.7389% of the Arby's
restaurant, in four separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds of
$1,279,056, which resulted in a net gain of $244,402. The total
cost and related accumulated depreciation of the interests sold
was $1,138,290 and $103,636, respectively.
Subsequent to March 31, 2003, the Partnership sold
85.4855% of the Children's World daycare center in Houston,
Texas, in three separate transactions, to unrelated third
parties. The Partnership received net sale proceeds of
approximately $897,000, which resulted in a net gain of
approximately $233,000.
During the first three months of 2003, the Partnership
distributed $70,707 of net sale proceeds to the Limited and
General Partners as part of their regular quarterly distributions
which represented a return of capital of $4.24 per Limited
Partnership Unit. The remaining net sale proceeds will either be
reinvested in additional property or distributed to the Partners
in the future.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On December 6, 2002, the Partnership purchased a 50%
interest in a parcel of land in West Chester, Ohio for $475,256,
including acquisition expenses. The land is leased to Champps
Operating Corporation (Champps) under a Lease Agreement with a
primary term of 20 years and annual rental payments of $50,600.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership will advance funds to Champps for the construction of
a Champps Americana restaurant on the site. Through March 31,
2003, the Partnership had advanced $226,009 for the construction
of the property and was charging interest on the advances at a
rate of 10.0%. The Partnership's share of the total purchase
price, including the cost of the land, will be approximately
$1,750,000. After the construction is complete, the Lease
Agreement will be amended to require annual rental payments of
approximately $175,000. The remaining interest in the property
is owned by AEI Net Lease Income and Growth Fund XX Limited
Partnership, an affiliate of the Partnership.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first ten days 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 on a semi-annual basis.
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 2002, six Limited Partners redeemed a total of
40.34 Partnership Units for $29,931 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, 17 Limited
Partners redeemed a total of 360.59 Partnership Units for
$276,605. The redemptions increase the remaining Limited
Partner's ownership interest in the Partnership.
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.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of 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 its disclosure
controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under the Exchange Act) related to the Partnership as of a date
(the "Evaluation Date") within 90 days prior to the filing date
of this report. Based upon that evaluation, the President and
Chief Financial Officer of the Managing General Partner concluded
that, as of the Evaluation Date, the disclosure controls and
procedures are effective in timely alerting them to the material
information relating to the Partnership required to be included
in periodic SEC filings.
(b) Changes in internal controls
There were no significant changes made in the
Partnership's internal controls during the period covered by this
report or, to the Managing General Partner's knowledge, in other
factors that could significantly affect these controls subsequent
to the date of their evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's property
is subject.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
99.1Certification of Chief Executive Officer of General
Partner pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
99.2Certification of Chief Financial Officer of General
Partner pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: April 12, 2003 AEI Income & Growth Fund XXII
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)
CERTIFICATIONS
I, Robert P. Johnson, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of AEI
Income & Growth Fund XXII Limited Partnership;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge; the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;
a)designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b)evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
"Evaluation Date"); and
c)presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a)all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
b)any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Dated: May 12, 2003 /s/ Robert P. Johnson
Robert P. Johnson, President
AEI Fund Management XXI, Inc.
Managing General Partner
CERTIFICATIONS
I, Patrick W. Keene, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of AEI
Income & Growth Fund XXII Limited Partnership;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge; the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for,
the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) for the registrant and have;
a)designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
b)evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
"Evaluation Date"); and
c)presented in this quarterly report our conclusions about
eh effectiveness of the disclosure control sand procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
functions):
a)all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
b)any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Dated: May 12, 2003 By: /s/ Patrick W. Keene
Patrick W. Keene, Chief Financial Officer
AEI Fund Management XXI, Inc.
Managing General Partner