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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: September 30, 2003
Commission file number: 000-49653
AEI INCOME & GROWTH FUND 24 LLC
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Delaware 41-1990952
(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
(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 24 LLC
INDEX
PART I.Financial Information
Item 1. Balance Sheet as of September 30, 2003 and December 31, 2002
Statements for the Periods ended September 30, 2003 and 2002:
Income
Cash Flows
Changes in Members' Equity
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
AEI INCOME & GROWTH FUND 24 LLC
BALANCE SHEET
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
(Unaudited)
ASSETS
2003 2002
CURRENT ASSETS:
Cash and Cash Equivalents $ 4,957,999 $ 1,897,635
Receivables 20,195 27,899
----------- -----------
Total Current Assets 4,978,194 1,925,534
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 6,071,284 4,173,535
Building and Equipment 10,420,942 5,966,598
Construction in Progress 0 902,806
Accumulated Depreciation (339,198) (110,574)
----------- -----------
Net Investments in Real Estate 16,153,028 10,932,365
----------- -----------
Total Assets $21,131,222 $12,857,899
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 14,917 $ 102,825
Distributions Payable 332,493 142,475
Unearned Rent 46,399 0
----------- -----------
Total Current Liabilities 393,809 245,300
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members' Equity (11,465) (2,624)
Limited Members' Equity, $1,000 Unit Value;
50,000 Units authorized; 24,831 and 14,976
Units issued and outstanding in
2003 and 2002, respectively 20,748,878 12,615,223
----------- -----------
Total Members' Equity 20,737,413 12,612,599
----------- -----------
Total Liabilities and Members' Equity $21,131,222 $12,857,899
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/03 9/30/02 9/30/03 9/30/02
RENTAL INCOME $ 334,310 $ 118,717 $ 857,925 $ 249,778
EXPENSES:
LLC Administration -
Affiliates 62,632 33,877 146,175 108,436
LLC Administration
and Property Management -
Unrelated Parties 4,989 2,546 43,056 13,315
Depreciation 90,735 28,821 228,624 63,200
---------- ---------- ---------- ----------
Total Expenses 158,356 65,244 417,855 184,951
---------- ---------- ---------- ----------
OPERATING INCOME 175,954 53,473 440,070 64,827
OTHER INCOME:
Interest Income 42,190 35,934 94,393 58,382
---------- ---------- ---------- ----------
NET INCOME $ 218,144 $ 89,407 $ 534,463 $ 123,209
========== ========== ========== ==========
NET INCOME ALLOCATED:
Managing Members $ 6,545 $ 2,682 $ 16,034 $ 3,696
Limited Members 211,599 86,725 518,429 119,513
---------- ---------- ---------- ----------
$ 218,144 $ 89,407 $ 534,463 $ 123,209
========== ========== ========== ==========
NET INCOME PER LLC UNIT $ 8.52 $ 8.53 $ 25.38 $ 15.80
========== ========== ========== ==========
Weighted Average Units
Outstanding 24,831 10,172 20,427 7,563
========== ========== ========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 534,463 $ 123,209
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 228,624 63,200
(Increase) Decrease in Receivables 7,704 (87,594)
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (87,908) 69,454
Increase in Unearned Rent 46,399 0
----------- -----------
Total Adjustments 194,819 45,060
----------- -----------
Net Cash Provided By
Operating Activities 729,282 168,269
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (5,449,287) (5,481,935)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Members 9,855,529 8,644,284
Organization and Syndication Costs (1,435,998) (1,296,643)
Increase in Distributions Payable 190,018 93,132
Distributions to Members (829,180) (248,539)
----------- -----------
Net Cash Provided By
Financing Activities 7,780,369 7,192,234
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,060,364 1,878,568
CASH AND CASH EQUIVALENTS, beginning of period 1,897,635 1,358,780
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 4,957,999 $ 3,237,348
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2001 $ 1,037 $ 2,997,021 $ 2,998,058 3,522.15
Capital Contributions 0 8,644,284 8,644,284 8,644.29
Organization and
Syndication Costs 0 (1,296,643) (1,296,643)
Distributions (7,457) (241,082) (248,539)
Net Income 3,696 119,513 123,209
-------- ----------- ----------- -----------
BALANCE, September 30, 2002 $ (2,724) $10,223,093 $10,220,369 12,166.44
======== =========== =========== ===========
BALANCE, December 31, 2002 $ (2,624) $12,615,223 $12,612,599 14,975.75
Capital Contributions 0 9,855,529 9,855,529 9,855.53
Organization and
Syndication Costs 0 (1,435,998) (1,435,998)
Distributions (24,875) (804,305) (829,180)
Net Income 16,034 518,429 534,463
-------- ----------- ----------- -----------
BALANCE, September 30, 2003 $(11,465) $20,748,878 $20,737,413 24,831.28
======== =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Company, 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 Company 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
Company's latest annual report on Form 10-KSB.
(2) Organization -
AEI Income & Growth Fund 24 LLC (the Company), a Limited
Liability Company, was formed on November 21, 2000 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 of AFM, serves as the Special
Managing Member and an affiliate of AFM, AEI Fund
Management, Inc., performs the administrative and operating
functions for the Company.
The terms of the offering call for a subscription price of
$1,000 per LLC Unit, payable on acceptance of the offer.
The Company commenced operations on October 31, 2001 when
minimum subscriptions of 1,500 LLC Units ($1,500,000) were
accepted. The offering terminated May 17, 2003 when the
extended offering period expired. The Company received
subscriptions for 24,831.283 Units. Under the terms of the
Operating Agreement, the Limited Members and Managing
Members contributed funds of $24,831,283 and $1,000,
respectively. The Company shall continue until December 31,
2051, 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 7%
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.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(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 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 7% 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.
(3) Summary of Real Estate Accounting Policies -
The Company's real estate is leased under triple net leases
classified as operating leases. The leases provide for base
annual rental payments payable in monthly installments. The
Company recognizes rental revenue according to the terms of
the individual leases. For leases which 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 is recorded at the lower of cost or estimated
net realizable value. The Company compares the carrying
amount of its properties to the estimated probability-
weighted future cash flows expected to result from the
property and its eventual disposition. If the sum of the
expected future cash flows is less than the carrying amount
of the property, the Company recognizes an impairment loss
by the amount by which the carrying amount of the property
exceeds the fair value of the property.
The Company has capitalized as Investments in Real Estate
certain costs incurred in the review and acquisition of the
properties. The costs were allocated to the land, buildings
and equipment.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Continued)
(3) Summary of Real Estate Accounting Policies - (Continued)
The buildings and equipment of the Company are depreciated
using the straight-line method for financial reporting
purposes based on estimated useful lives of 25 years and 5
years, respectively.
In accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, upon complete disposal of a property
or classification of a property as Real Estate Held for
Sale, the Company includes the operating results and sale of
the property in discontinued operations. In addition, the
Company reclassifies the prior periods operating results and
any partial sales of the property to discontinued
operations.
(4) Reclassification -
Certain items in the prior year's financial statements have
been reclassified to conform to 2003 presentation. These
reclassifications had no effect on Members' capital, net
income or cash flows.
(5) Investments in Real Estate -
On May 22, 2002, the Company purchased a Children's World
daycare center in Tinley Park, Illinois for $1,901,845. The
property is leased to ARAMARK Educational Resources, Inc.
under a Lease Agreement with a primary term of 15 years and
annual rental payments of $180,212.
On November 7, 2002, the Company purchased a 72% interest in
a Jared Jewelry store in Pittsburgh, Pennsylvania for
$2,620,893. The property is leased to Sterling Inc. under a
Lease Agreement with a primary term of 20 years and annual
rental payments of $240,285. The remaining interest in the
property is owned by AEI Private Net Lease Millennium Fund
Limited Partnership, an affiliate of the Company.
On April 8, 2002, the Company purchased a parcel of land in
Houston, Texas for $1,211,500. The Partnership obtained
title to the land in the form of an undivided fee simple
interest. The land is leased to Champps Entertainment of
Texas, Inc. (Champps) under a Lease Agreement with a primary
term of 20 years and annual rental payments of $121,150.
Simultaneously with the purchase of land, the Company
entered into a Development Financing Agreement under which
the Company advanced funds to Champps for the construction
of a Champps Americana restaurant on the site. Pursuant to
the Lease, any improvements to the land during the term of
the Lease become the property of the lessor. The Company
charged interest on the advances at a rate of 10%. On
December 18, 2002, after the development was completed, the
Lease Agreement was amended to require annual rental
payments of $316,500. Total acquisition costs, including
the cost of the land, were $3,106,301.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Continued)
(5) Investments in Real Estate - (Continued)
On September 23, 2002, the Company purchased a parcel of
land in Littleton, Colorado for $784,052. The Partnership
obtained title to the land in the form of an undivided fee
simple interest. The land is leased to Kona Restaurant
Group, Inc. (KRG) under a Lease Agreement with a primary
term of 17 years and annual rental payment of $78,405.
Simultaneously with the purchase of land, the Company
entered into a Development Financing Agreement under which
the Company advanced funds to KRG for the construction of a
Johnny Carino's restaurant on the site. Pursuant to the
Lease, any improvements to the land during the term of the
Lease become the property of the lessor. The Company
charged interest on the advances at a rate of 10%. On April
10, 2003, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$223,500. Total acquisition costs, including the cost of
the land, were $2,223,755.
On August 8, 2003, the Company purchased a Pancho's
restaurant in Round Rock, Texas for $1,809,191. The
property is leased to Austin Pancho's I, LLC under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $191,625.
On August 27, 2003, the Company purchased a 23% interest in
a Garden Ridge retail store in Woodlands, Texas for
$1,891,728. The property is leased to Cypress/GR Woodlands
I, L.P. under a Lease Agreement with a primary term of 20
years and annual rental payments of $216,783. The remaining
interests in the property were purchased by AEI Real Estate
Fund XVIII Limited Partnership, AEI Income & Growth Fund
XXII Limited Partnership and AEI Real Estate Fund XV Limited
Partnership, affiliates of the Company.
On September 19, 2003, the Company purchased a 26% interest
in a Winn-Dixie store in Panama City, Florida for
$1,190,364. The property is leased to Winn-Dixie
Montgomery, Inc. under a Lease Agreement with a primary term
of 20 years and annual rental payments of $97,240. The
remaining interests in the property were purchased by AEI
Net Lease Income & Growth Fund XIX Limited Partnership and
AEI Income & Growth Fund XXI Limited Partnership, affiliates
of the Company.
In November 2003, the Company entered into Agreements to
purchase Tia's Tex-Mex restaurants in Tampa, Florida and
Salisbury, Maryland. The purchase prices will be
approximately $2,550,000 and $2,000,000, respectively. The
properties will be leased to Tia's Florida LLC and Tia's
Maryland LLC under Lease Agreements with primary terms of 15
years and annual rental payments of $260,100 and $204,000,
respectively. As part of the acquisition agreement, the
lessee agreed to pay the Company interest at an annual rate
of 6% on the proposed purchase price of the properties for
the period from September 3, 2003 to the date the
acquisition is completed or terminated. The interest is
payable whether or not the acquisition is completed.
Subsequent to September 30, 2003, the Company sold 19.9657%
of the Children's World daycare center in Round Lake Beach,
Illinois, in two separate transactions, to unrelated third
parties. The Company received net sale proceeds of
approximately $446,000, which resulted in a net gain of
approximately $118,000.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
(Continued)
(6) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Company. 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 our
managers, must be evaluated in the context of a number of factors
that may affect our financial condition and results of
operations, including the following:
Market and economic conditions which affect the value
of the properties we own 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 members;
resolution by our managers of conflicts with which they
may be confronted;
the success of our managers 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 Company operate.
The Application of Critical Accounting Policies
The preparation of the Company'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 Company as opposed to other funds they manage.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The Company purchases properties and records them in the
financial statements at the lower of cost or estimated realizable
value. The Company initially records the properties at cost
(including capitalized acquisition expenses). The Company is
required to periodically evaluate the carrying value of
properties to determine whether their realizable value has
declined. For properties the Company 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 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 Company reimburses these expenses subject to
detailed limitations contained in the Operating Agreement.
Management of the Company has discussed the development
and selection of the above accounting estimates and the
management discussion and analysis disclosures regarding them
with the managing member of the Company.
Results of Operations
For the nine months ended September 30, 2003, the Company
recognized rental income of $857,925 representing nine months
rent from five properties and rent from three properties acquired
during the period. As of September 30, 2003, the scheduled
annual rent for the eight properties is $1,632,680. For the nine
months ended September 30, 2002, the Company recognized rental
income of $249,778, representing nine months rental income from
one property and rent from three properties acquired during the
period. Rental income increases as the Company invests its
available subscription proceeds in properties.
For the nine months ended September 30, 2003 and 2002, the
Company incurred LLC administration expenses from affiliated
parties of $146,175 and $108,436, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Members. During
the same periods, the Company incurred LLC administration and
property management expenses from unrelated parties of $43,056
and $13,315, 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. These expenses are higher
in 2003, when compared to the same periods in 2002, because the
Company's asset base was higher in 2003, from the sale of
additional LLC units, and the Company owned more properties
during 2003.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
For the nine months ended September 30, 2003 and 2002, the
Company recognized interest income of $94,393 and $58,382,
respectively, from subscription proceeds temporarily invested in
a money market account and from construction advances. In 2003,
the Company also recognized interest from an agreement related to
the potential acquisition of two Tia's Tex-Mex restaurants. As
part of the acquisition agreement, the lessee agreed to pay the
Company interest at an annual rate of 6% on the proposed purchase
price of the properties for the period from September 3, 2003 to
the date the acquisition is completed or terminated. The
interest is payable whether or not the acquisition is completed.
In 2003, interest income increased due to this agreement and the
Company had more money invested in a money market account from
the sale of additional LLC Units.
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 Company 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
The Company's primary sources of cash are proceeds from
the sale of Units, interest income, rental income and proceeds
from the sale of property. Its primary uses of cash are
investment in real properties, payment of expenses involved in
the sale of Units, the organization of the Company, the
management of properties, the administration of the Company, and
the payment of distributions.
The Company generated $729,282 of cash from operations
during the nine months ended September 30, 2003, representing net
income of $534,463 and a non-cash expense of $228,624 for
depreciation, which were partially offset by net timing
differences in the collection of payments from the lessees and
the payment of expenses to our managers. The Company generated
$168,269 of cash from operations during the nine months ended
September 30, 2002, representing net income of $123,209 and a non-
cash expense of $63,200 for depreciation, which were partially
offset by net timing differences in the collection of payments
from the lessees and the payment of expenses to our managers.
The major components of the Company's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the nine months ended
September 30, 2003 and 2002, the Company expended $5,449,287 and
$5,481,935, respectively, to invest in real properties (inclusive
of acquisition expenses).
On May 22, 2002, the Company purchased a Children's World
daycare center in Tinley Park, Illinois for $1,901,845. On
November 7, 2002, the Company purchased a 72% interest in a Jared
Jewelry store in Pittsburgh, Pennsylvania for $2,620,893. On
April 8, 2002, the Company purchased a parcel of land in Houston,
Texas for $1,211,500. Simultaneously with the purchase of land,
the Company entered into a Development Financing Agreement under
which the Company advanced funds for the construction of a
Champps Americana restaurant on the site. On December 18, 2002,
the development was completed at a total cost of $3,106,301,
including the cost of the land.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On September 23, 2002, the Company purchased a parcel of
land in Littleton, Colorado for $784,052. Simultaneously with
the purchase of land, the Company entered into a Development
Financing Agreement under which the Company advanced funds to KRG
for the construction of a Johnny Carino's restaurant on the site.
On April 10, 2003, the development was completed at a total cost
of $2,223,755, including the cost of the land.
On August 8, 2003, the Company purchased a Pancho's
restaurant in Round Rock, Texas for $1,809,191. On August 27,
2003, the Company purchased a 23% interest in a Garden Ridge
retail store in Woodlands, Texas for $1,891,728. On September
19, 2003, the Company purchased a 26% interest in a Winn-Dixie
store in Panama City, Florida for $1,190,364.
Subsequent to September 30, 2003, the Company sold
19.9657% of the Children's World daycare center in Round Lake
Beach, Illinois, in two separate transactions, to unrelated third
parties. The Company received net sale proceeds of approximately
$446,000, which resulted in a net gain of approximately $118,000.
The Company commenced the offering of LLC units to the
public through a registration statement that became effective May
18, 2001 and continued until May 17, 2003, when the extended
offering period expired. The Company raised a total of
$24,831,283 from the sale of 24,831.283 units. From subscription
proceeds, the Company paid organization and syndication costs
(which constitute a reduction of capital) of $3,681,361.
After completion of the acquisition phase, the Company's
primary use of cash flow is distribution and redemption payments
to Members. The Company 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.
For the nine months ended September 30, 2003 and 2002, the
Company declared distributions of $829,180 and $248,539,
respectively, which were distributed 97% to Limited Members and
3% to the Managing Members.
Beginning in 2004, the Company may acquire 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 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 Operating Agreement), would
exceed 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.
The Operating Agreement requires that all proceeds from
the sale of units, subject to a reasonable reserve for ongoing
operations, be invested or committed to investment in properties
by the later of two years after the date the offering of units
commences or six months after the offering terminates. Although
the Company had no formal contractual commitments to expend
capital at September 30, 2003, it entered into two commitments
after this date.
In November 2003, the Company entered into Agreements to
purchase Tia's Tex-Mex restaurants in Tampa, Florida and
Salisbury, Maryland. The purchase prices will be approximately
$2,550,000 and $2,000,000, respectively.
Until capital is invested in properties, the Company will
remain extremely liquid. After completion of property
acquisitions, the Company will attempt to maintain a cash reserve
of only approximately 1% of subscription proceeds. Because
properties are purchased for cash and leased under triple-net
leases, this is considered adequate to satisfy most
contingencies.
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 Member of the Company evaluated the effectiveness of
the design and operation of its disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Exchange Act).
Based upon that evaluation, the President and Chief Financial
Officer of the Managing Member concluded that, as of the end of
the period covered by this report, the disclosure controls and
procedures of the Company are adequately designed to ensure that
information required to be disclosed by us in the reports we file
or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in
applicable rules and forms.
(b) Changes in internal controls
There were no significant changes made in the Company's
internal controls during the most recent period covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Company is a party or of which the Company'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
10.1 Assignment of Purchase Agreement dated August 19,
2003 between the Company and AEI Fund Management, Inc.
relating to the Property at 16778 I-45 South,
Woodlands, Texas (incorporated by reference to Exhibit
10.1 of Form 8-K filed on September 6, 2003).
10.2 Assignment of Lease, Indemnity and Assumption
Agreement dated August 27, 2003 between the Company,
AEI Real Estate Fund XVIII Limited Partnership, AEI
Income & Growth Fund XXII Limited Partnership, AEI
Real Estate Fund XV Limited Partnership and Cypress/GR
Woodlands I, L.P. relating to the Property at 16778
I-45 South, Woodlands,Texas (incorporated by reference
to Exhibit 10.2 of Form 8-K filed on September 6,2003).
10.3 Assignment of Sale-Purchase Agreement dated August 19,
2003 between the Company and AEI Fund Management, Inc.
relating to the Property at 3621 Highway 231 North,
Panama City, Florida.
10.4 Assignment and Assumption of Lease Agreement dated
September 19, 2003 between the Company, AEI Net Lease
Income & Growth Fund XIX Limited Partnership, AEI
Income & Growth Fund XXI Limited Partnership and
Transmitter Crossing, LLC relating to the Property
at 3621 Highway 231 North, Panama City, Florida.
10.5 Assignment of Purchase Agreement dated November 12,
2003 between the Company and AEI Fund Management, Inc.
relating to the Property at 1503 North Dale Mabry,
Tampa, Florida.
10.6 Assignment of Purchase Agreement dated November 12,
2003 between the Company and AEI Fund Management, Inc.
relating to the Property at 2318 North Salisbury
Boulevard, Salisbury, Maryland.
31.1 Certification of Chief Executive Officer of Managing
Member 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 Managing
Member 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 Managing Member pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
b. Reports filed on Form 8-K - During the quarter ended
September 30, 2003, the
Company filed a Form 8-K
dated September 6, 2003,
reporting the acquisition
of a Garden Ridge retail
store in Woodlands, Texas.
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: November 11, 2003 AEI Income & Growth Fund 24 LLC
By: AEI Fund Management XXI, Inc.
Its: Managing Member
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)
Dates Referenced Herein and Documents Incorporated by Reference
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