Attached files
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: September 30, 2009
Commission File Number: 000-18289
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
State of Minnesota 41-1622463
(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 reportingcompany [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [ ] No
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited):
Statement of Net Assets Available for Liquidation
as of September 30, 2009 and December 31, 2008
Statement of Liquidating Activities for the
Periods ended September 30, 2009 and 2008
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 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
Signatures
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF NET ASSETS AVAILABLE FOR LIQUIDATION
SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
2009 2008
ASSETS:
Cash $ 726,162 $ 833,860
Investments in Real Estate 946,400 1,074,400
----------- -----------
Total Assets 1,672,562 1,908,260
----------- -----------
LIABILITIES:
Payable to AEI Fund Management, Inc. 10,501 5,675
Distributions Payable 42,929 51,512
----------- -----------
Total Liabilities 53,430 57,187
----------- -----------
NET ASSETS (PARTNERS' CAPITAL) IN LIQUIDATION,
including 18,957 Limited Partnership
Units outstanding $ 1,619,132 $ 1,851,073
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF LIQUIDATING ACTIVITIES
FOR THE PERIODS ENDED SEPTEMBER 30
Three Months Ended Nine Months Ended
9/30/09 9/30/08 9/30/09 9/30/08
SOURCES OF ADDITIONAL CASH:
Rent $ 24,505 $ 26,019 $ 79,678 $ 96,354
Interest Income 1,850 6,331 5,994 25,575
Proceeds from Sale of Real Estate 0 549,943 0 3,602,373
---------- ---------- ---------- ---------
Total Sources of
Additional Cash 26,355 582,293 85,672 3,724,302
---------- ---------- ---------- ---------
USES OF ADDITIONAL CASH:
Partnership Administration -
Affiliates 13,068 13,411 43,175 52,825
Partnership Administration and
Property Management -
Unrelated Parties 1,931 0 12,824 61,814
Distributions Paid to Partners 42,930 59,092 137,371 3,121,751
---------- ---------- ---------- ---------
Total Uses of Additional
Cash 57,929 72,503 193,370 3,236,390
---------- ---------- ---------- ---------
INCREASE (DECREASE) IN NET ASSETS
IN LIQUIDATION
BEFORE ADJUSTMENTS (31,574) 509,790 (107,698) 487,912
---------- ---------- ---------- ---------
ADJUSTMENTS OF ESTIMATED VALUES:
Change in Net Realizable values of:
Real Estate 0 0 (128,000) 0
Payable to AEI
Fund Management, Inc. (481) (4,879) (4,826) 12,998
Distributions Payable 0 (505,044) 8,583 (448,246)
Unearned Rent 2,092 84 0 20,125
Net Realizable Value of
Real Estate Sold 0 (550,000) 0 (3,582,000)
---------- ---------- ---------- ---------
Total Adjustment of
Estimated Values 1,611 (1,059,839) (124,243) (3,997,123)
---------- ---------- ---------- ---------
DECREASE IN NET ASSETS
IN LIQUIDATION (29,963) (550,049) (231,941) (3,509,211)
BEGINNING NET ASSETS
IN LIQUIDATION 1,649,095 2,445,767 1,851,073 5,404,929
---------- ---------- ---------- ---------
ENDING NET ASSETS
IN LIQUIDATION $1,619,132 $1,895,718 $1,619,132 $1,895,718
========== ========== ========== =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(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 Real Estate Fund XVIII Limited Partnership
("Partnership") was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XVIII, 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 February 15, 1989 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The offering terminated
December 4, 1990 when the extended offering period expired.
The Partnership received subscriptions for 22,783.05 Limited
Partnership Units. Under the terms of the Limited
Partnership Agreement, the Limited Partners and General
Partners contributed funds of $22,783,050, 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 REAL ESTATE FUND XVIII 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 l% to the General Partners until the
Limited Partners receive an amount equal to: (a) their
Adjusted Capital Contribution plus (b) an amount equal to 6%
of their Adjusted Capital Contribution per annum, cumulative
but not compounded, to the extent not previously distributed
from Net Cash Flow; (ii) next, 99% to the Limited Partners
and 1% to the General Partners until the Limited Partners
receive an amount equal to 14% of their Adjusted Capital
Contribution per annum, cumulative but not compounded, to
the extent not previously distributed; (iii) next, to the
General Partners until cumulative distributions to the
General Partners under Items (ii) and (iii) equal 15% of
cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% 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 90% to
the Limited Partners and 10% to the General Partners. In the
event no Net Cash Flow is distributed to the Limited
Partners, 90% of each item of income, gain or credit for
each respective year shall be allocated to the Limited
Partners, and 10% of each such item shall be allocated to
the General Partners. Net losses from operations will be
allocated 98% to the Limited Partners and 2% 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 14% of their Adjusted Capital Contributions
per annum, cumulative but not compounded, to the extent not
previously allocated; (iii) third, to the General Partners
until cumulative allocations to the General Partners equal
15% of cumulative allocations. Any remaining balance will
be allocated 85% to the Limited Partners and 15% 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.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
In January 2009, the Managing General Partner solicited by
mail a proxy statement seeking the consent of the Limited
Partners, as required by Section 6.1 of the Partnership
Agreement, to initiate the final disposition, liquidation
and distribution of all of the Partnership's properties and
assets within the next year. On February 24, 2009, the
proposal was approved with a majority of Units voted in
favor of the proposal. As a result, the Managing General
Partner will proceed with the planned liquidation of the
Partnership. At this time, the Partnership anticipates that
it will sell its remaining property and liquidate prior to
December 31, 2010.
Financial Statement Presentation
Because liquidation was anticipated, the Partnership
changed its basis of accounting after September 30, 2007,
from the going concern basis to the liquidation basis.
Effective October 1, 2007, the Partnership measures its
assets and liabilities at the amounts of cash expected in
liquidation and reports changes in estimates when they
are known. The accounts of the Partnership are
maintained on the accrual basis of accounting for both
federal income tax purposes and financial reporting
purposes.
(3) Investments in Real Estate -
Effective with the decision to liquidate, the carrying
amounts of assets and liabilities were adjusted from their
historical bases to the amounts of cash expected from their
realization and settlement. Because of the expected short
liquidation period, the effects of discounting would not be
significant and have been ignored. At December 31, 2008,
the estimated real estate values were based upon comparable
sales of similar properties. At September 30, 2009, the
estimated real estate values were based upon comparable
sales of similar properties and a subsequent sale of one
property. It is reasonably possible that the amounts
expected to be realized in the liquidation process may
change in the near term.
On June 30, 2007, the Lease term expired for the KinderCare
daycare center in Blue Springs, Missouri. The tenant
reviewed their operations at the property and decided not to
enter into an agreement to extend the term of the Lease.
While the property was vacant, the Partnership was
responsible for real estate taxes and other costs associated
with maintaining the property. On July 23, 2008, the
Partnership sold the daycare center to an unrelated third
party. The Partnership received net sale proceeds of
$549,943. At the time of sale, the estimated net realizable
value was $550,000.
On January 25, 2008, the Partnership sold the KinderCare
daycare center in Westerville, Ohio to an unrelated third
party. The Partnership received net sale proceeds of
$1,423,596. At the time of sale, the estimated net
realizable value was $1,415,000.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On March 12, 2008, the Partnership sold the KinderCare
daycare center in Columbus, Ohio to an unrelated third
party. The Partnership received net sale proceeds of
$1,628,834. At the time of sale, the estimated net
realizable value was $1,617,000.
During the first nine months of 2009 and 2008, the
Partnership distributed net sale proceeds of $103,939 and
$3,529,584 to the Limited and General Partners as part of
their quarterly distributions, which represented a return of
capital of $5.43 and $184.33 per Limited Partnership Unit,
respectively.
In March 2009, Tumbleweed, Inc., the tenant of the
Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter
11 bankruptcy reorganization. Rents are current and the
Partnership expects to continue to receive all scheduled
rents in future months unless the Lease is rejected by
Tumbleweed. If the Lease is assumed, Tumbleweed must comply
with all Lease terms. If the Lease is rejected, Tumbleweed
would be required to return possession of the property to
the Partnership and the Partnership would be responsible for
real estate taxes and other costs associated with
maintaining the property. In July 2009, the tenant
contacted the Partnership and offered to assume the Lease
and extend the Lease term five years in exchange for a 15%
rent reduction. The Partnership accepted this offer and
agreed to a Lease Amendment, which is subject to court
approval of the tenant's Plan of Reorganization. At June
30, 2009, based on the proposed rent reduction and an
analysis of market conditions in the area, the Partnership
recognized a $110,000 adjustment to decrease the estimated
net realizable value of the property.
Subsequent to September 30, 2009, the Partnership sold its
remaining 9.3699% interest in the Taco Cabana restaurant in
San Antonio, Texas to the tenant. The Partnership received
net sale proceeds of approximately $158,000, which was equal
to the property's estimated net realizable value. At June
30, 2009, based on the signed purchase agreement, the
Partnership recognized an $18,000 adjustment to decrease the
estimated net realizable value of the property.
(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.
(5) Subsequent Events -
The Partnership has evaluated subsequent events through
November 10, 2009, the date which the financial statements
were available to be issued. Subsequent events, if any,
were disclosed in the appropriate note in the Notes to
Financial Statements.
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 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 real
estate and the allocation by AEI Fund Management, Inc. of
expenses to the Partnership as opposed to other funds they
manage.
Effective October 1, 2007, the Partnership adopted the
liquidation basis of accounting because the General Partners
anticipated the liquidation of the Partnership during 2008. In
accordance with the liquidation basis of accounting, assets are
recorded at their estimated net realizable value (the amount of
cash expected to be received) and liabilities are recorded at the
amount estimated to be paid to creditors and Partners. At
September 30, 2009, the estimated real estate values were based
upon comparable sales of similar properties and a subsequent sale
of one property. Any changes in these estimates may cause
material changes in the net assets in liquidation.
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.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Results of Operations
For the nine months ended September 30, 2009 and 2008,
while in the liquidation phase, the Partnership recognized rental
income of $79,678 and $116,479, respectively. In 2009, rental
income decreased mainly as a result of property sales. During
the same periods, the Partnership recognized interest income of
$5,994 and $25,575, respectively. In 2008, interest income was
higher due to higher money market interest rates in 2008, when
compared to 2009, and the Partnership had more money invested in
a money market account due to property sales. The majority of
the sales proceeds were subsequently distributed to the Partners.
For the nine months ended September 30, 2009 and 2008,
while in the liquidation phase, the Partnership incurred
Partnership administration expenses from affiliated parties of
$43,175 and $53,002, respectively. These administration expenses
include costs associated with the management of the properties,
processing distributions, reporting requirements and
communicating with the Limited Partners. As the Partnership's
asset base decreases due to property sales, it is allocated a
smaller share of expenses that are allocated by AEI Fund
Management, Inc. based on the relative assets of the funds under
management. During the same periods, the Partnership incurred
Partnership administration and property management expenses from
unrelated parties of $17,650 and $48,639, 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. These expenses were
higher in 2008, when compared to 2009, as a result of expenses
incurred in 2008 related to the KinderCare daycare center in Blue
Springs, Missouri.
In March 2009, Tumbleweed, Inc., the tenant of the
Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter 11
bankruptcy reorganization. Rents are current and the Partnership
expects to continue to receive all scheduled rents in future
months unless the Lease is rejected by Tumbleweed. If the Lease
is assumed, Tumbleweed must comply with all Lease terms. If the
Lease is rejected, Tumbleweed would be required to return
possession of the property to the Partnership and the Partnership
would be responsible for real estate taxes and other costs
associated with maintaining the property. In July 2009, the
tenant contacted the Partnership and offered to assume the Lease
and extend the Lease term five years in exchange for a 15% rent
reduction. The Partnership accepted this offer and agreed to a
Lease Amendment, which is subject to court approval of the
tenant's Plan of Reorganization. At June 30, 2009, based on the
proposed rent reduction and an analysis of market conditions in
the area, the Partnership recognized a $110,000 adjustment to
decrease the estimated net realizable value of the property.
For the nine months ended September 30, 2009 and 2008, the
Partnership recognized adjustments of estimated values of
($124,243) and ($3,997,123), respectively, resulting from
adopting the liquidation basis of accounting and recording its
assets at estimated net realizable value and liabilities at the
amount estimated to be paid.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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
In January 2009, the Managing General Partner solicited by
mail a proxy statement seeking the consent of the Limited
Partners, as required by Section 6.1 of the Partnership
Agreement, to initiate the final disposition, liquidation and
distribution of all of the Partnership's properties and assets
within the next year. On February 24, 2009, the proposal was
approved with a majority of Units voted in favor of the proposal.
As a result, the Managing General Partner will proceed with the
planned liquidation of the Partnership. At this time, the
Partnership anticipates that it will sell its remaining property
and liquidate prior to December 31, 2010.
During the nine months ended September 30, 2009, while in
the liquidation phase, the Partnership's Net Assets in
Liquidation decreased $231,941 as a result of distributions paid
to the Partners in excess of cash generated from operating
activities and a decrease in the estimated net realizable value
of property. During the nine months ended September 30, 2008,
while in the liquidation phase, the Partnership's Net Assets in
Liquidation decreased $3,509,211 as a result of distributions of
net sale proceeds to the Partners.
On June 30, 2007, the Lease term expired for the
KinderCare daycare center in Blue Springs, Missouri. The tenant
reviewed their operations at the property and decided not to
enter into an agreement to extend the term of the Lease. While
the property was vacant, the Partnership was responsible for real
estate taxes and other costs associated with maintaining the
property. On July 23, 2008, the Partnership sold the daycare
center to an unrelated third party. The Partnership received net
sale proceeds of $549,943. At the time of sale, the estimated
net realizable value was $550,000.
On January 25, 2008, the Partnership sold the KinderCare
daycare center in Westerville, Ohio to an unrelated third party.
The Partnership received net sale proceeds of $1,423,596. At the
time of sale, the estimated net realizable value was $1,415,000.
On March 12, 2008, the Partnership sold the KinderCare
daycare center in Columbus, Ohio to an unrelated third party.
The Partnership received net sale proceeds of $1,628,834. At the
time of sale, the estimated net realizable value was $1,617,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Subsequent to September 30, 2009, the Partnership sold its
remaining 9.3699% interest in the Taco Cabana restaurant in San
Antonio, Texas to the tenant. The Partnership received net sale
proceeds of approximately $158,000, which was equal to the
property's estimated net realizable value. At June 30, 2009,
based on the signed purchase agreement, the Partnership
recognized an $18,000 adjustment to decrease the estimated net
realizable value of the property.
The Partnership's primary use of cash flow is distribution
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.
For the nine months ended September 30, 2009 and 2008, the
Partnership declared distributions of $128,788 and $3,569,997,
respectively, which were distributed 99% to the Limited Partners
and 1% to the General Partners. The Limited Partners received
distributions of $127,500 and $3,534,297 and the General Partners
received distributions of $1,288 and $35,700 for the periods,
respectively. In March and September 2008, the Partnership
declared special distributions of net sale proceeds of $2,828,283
and $505,051, respectively, which resulted in higher
distributions in 2008.
During the first nine months of 2009 and 2008, the
Partnership distributed net sale proceeds of $103,939 and
$3,529,584 to the Limited and General Partners as part of their
quarterly distributions, which represented a return of capital of
$5.43 and $184.33 per Limited Partnership Unit, respectively.
The continuing rent payments from the properties, together
with the Partnership's cash reserve, should be adequate to fund
continuing distributions and meet other Partnership obligations.
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 companies. 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 companies.
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.
Beginning in the fourth quarter of 2008, general economic
conditions caused the volume of property sales to slow
dramatically for all real estate sellers. These conditions may
make it more difficult for the Partnership to sell its remaining
properties at acceptable prices, which it must do in order to
complete its liquidation.
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.
PART II - OTHER INFORMATION
(Continued)
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,
as amended, each Limited Partner has the right to present Units
to the Partnership for purchase by submitting notice to the
Managing General Partner. The purchase price of the Units is
equal to 90% of the net asset value per Unit as determined by the
Managing General Partner in accordance with the provisions of the
Partnership Agreement. Units tendered to the Partnership are
redeemed at the purchase price established for the quarter in
which the Partnership received a notice at least 60 days prior to
the repurchase dates of January 1st, April 1st, July 1st and
October 1st subject to the following limitations. The
Partnership is not obligated to purchase in any year more than 5%
of the number of Units outstanding at the beginning of the year.
In no event shall the Partnership be obligated to purchase Units
if, in the sole discretion of the Managing General Partner, such
purchase would impair the capital or operation of the
Partnership. During the period covered by this report, the
Partnership did not purchase any Units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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: November 10, 2009 AEI Real Estate Fund XVIII
Limited Partnership
By: AEI Fund Management XVIII, 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
