AEI INCOME & GROWTH FUND 25 LLC - FORM 10-Q

Attached files

file	filename
EX-32 - AEI INCOME & GROWTH FUND 25 LLC	ex32-25.htm
EX-31.1 - AEI INCOME & GROWTH FUND 25 LLC	ex31-125.htm
EX-31.2 - AEI INCOME & GROWTH FUND 25 LLC	ex31-225.htm
EXCEL - IDEA: XBRL DOCUMENT - AEI INCOME & GROWTH FUND 25 LLC	Financial_Report.xls

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, 2011

Commission File Number: 000-50609

AEI INCOME & GROWTH FUND 25 LLC

(Exact name of registrant as specified in its charter)

State of Delaware		75-3074973
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

30 East 7th Street, Suite 1300 St. Paul, Minnesota 55101		(651) 227-7333
(Address of principal executive offices)		(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 o 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). o Yes o 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.

o Large accelerated filer	o Accelerated filer
o Non-accelerated filer	x Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

AEI INCOME & GROWTH FUND 25 LLC

INDEX

				Page
Part I – Financial Information

	Item 1.	Financial Statements (unaudited):

		Balance Sheet as of September 30, 2011 and December 31, 2010		3

		Statements for the Periods ended September 30, 2011 and 2010:

			Income	4

			Cash Flows	5

			Changes in Members' Equity (Deficit)	6

		Notes to Financial Statements		7 - 9

	Item 2.	Management's Discussion and Analysis of Financial
			Condition and Results of Operations	10 - 14

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		14

	Item 4.	Controls and Procedures		14

Part II – Other Information

	Item 1.	Legal Proceedings		15

	Item 1A.	Risk Factors		15

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		15

	Item 3.	Defaults Upon Senior Securities		15

	Item 5.	Other Information		15

	Item 6.	Exhibits		15

Signatures				16

Page 2 of 16

AEI INCOME & GROWTH FUND 25 LLC

BALANCE SHEET

ASSETS

		September 30,		December 31,
		2011		2010
Current Assets:
Cash	$	3,040,572	$	2,209,831

Real Estate Held for Investment:
Land		10,774,559		10,774,559
Buildings and Equipment		23,091,445		23,091,445
Accumulated Depreciation		(5,556,242)		(4,868,084)
Real Estate Held for Investment, Net		28,309,762		28,997,920
Real Estate Held for Sale		152,440		935,815
Total Real Estate		28,462,202		29,933,735
Total Assets	$	31,502,774	$	32,143,566

LIABILITIES AND MEMBERS’ EQUITY

		September 30,		December 31,
		2011		2010
Current Liabilities:
Payable to AEI Fund Management, Inc.	$	87,787	$	82,853
Distributions Payable		544,949		651,717
Unearned Rent		33,154		40,353
Total Current Liabilities		665,890		774,923

Members’ Equity (Deficit):
Managing Members		1,172		1,925
Limited Members, $1,000 per Unit; 50,000 Units authorized; 42,435 Units issued; 41,929 and 41,972 Units outstanding in 2011 and 2010, respectively		30,835,712		31,366,718
Total Members’ Equity		30,836,884		31,368,643
Total Liabilities and Members’ Equity	$	31,502,774	$	32,143,566

The accompanying Notes to Financial Statements are an integral part of this statement.

Page 3 of 16

AEI INCOME & GROWTH FUND 25 LLC

STATEMENT OF INCOME

		Three Months Ended September 30,				Nine Months Ended September 30,
		2011		2010		2011		2010

Rental Income	$	649,825	$	624,200	$	1,949,649	$	1,869,575

Expenses:
LLC Administration – Affiliates		87,225		94,235		269,801		270,522
LLC Administration and Property Management – Unrelated Parties		15,663		11,811		52,400		41,976
Depreciation		229,386		223,232		688,158		678,919
Total Expenses		332,274		329,278		1,010,359		991,417

Operating Income		317,551		294,922		939,290		878,158

Other Income:
Interest Income		4,114		4,147		12,655		10,916

Income from Continuing Operations		321,665		299,069		951,945		889,074

Income from Discontinued Operations		69,494		71,929		179,446		225,758

Net Income	$	391,159	$	370,998	$	1,131,391	$	1,114,832

Net Income Allocated:
Managing Members	$	16,905	$	16,596	$	49,141	$	49,830
Limited Members		374,254		354,402		1,082,250		1,065,002
Total	$	391,159	$	370,998	$	1,131,391	$	1,114,832

Income per LLC Unit:
Continuing Operations	$	7.44	$	6.91	$	22.01	$	20.54
Discontinued Operations		1.49		1.53		3.79		4.82
Total	$	8.93	$	8.44	$	25.80	$	25.36

Weighted Average Units Outstanding – Basic and Diluted		41,929		41,972		41,944		41,988

The accompanying Notes to Financial Statements are an integral part of this statement.

Page 4 of 16

AEI INCOME & GROWTH FUND 25 LLC

STATEMENT OF CASH FLOWS

		Nine Months Ended September 30,
		2011		2010
Cash Flows from Operating Activities:
Net Income	$	1,131,391	$	1,114,832

Adjustments to Reconcile Net Income To Net Cash Provided by Operating Activities:
Depreciation		688,158		678,919
Gain on Sale of Real Estate		(135,269)		(90,911)
Increase (Decrease) in Payable to AEI Fund Management, Inc.		4,934		(31,690)
Increase (Decrease) in Unearned Rent		(7,199)		(63,525)
Total Adjustments		550,624		492,793
Net Cash Provided By Operating Activities		1,682,015		1,607,625

Cash Flows from Investing Activities:
Proceeds from Sale of Real Estate		918,644		630,957

Cash Flows from Financing Activities:
Distributions Paid to Members		(1,741,615)		(1,634,850)
Redemption Payments		(28,303)		(30,620)
Net Cash Used For Financing Activities		(1,769,918)		(1,665,470)

Net Increase (Decrease) in Cash		830,741		573,112

Cash, beginning of period		2,209,831		1,410,759

Cash, end of period	$	3,040,572	$	1,983,871

The accompanying Notes to Financial Statements are an integral part of this statement.

Page 5 of 16

AEI INCOME & GROWTH FUND 25 LLC

STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)

		Managing Members		Limited Members		Total	Limited Member Units Outstanding

Balance, December 31, 2009	$	859	$	32,121,530	$	32,122,389	42,019.28

Distributions Declared		(49,046)		(1,585,803)		(1,634,849)

Redemption Payments		(918)		(29,702)		(30,620)	(46.92)

Net Income		49,830		1,065,002		1,114,832

Balance, September 30, 2010	$	725	$	31,571,027	$	31,571,752	41,972.36


Balance, December 31, 2010	$	1,925	$	31,366,718	$	31,368,643	41,972.36

Distributions Declared		(49,045)		(1,585,802)		(1,634,847)

Redemption Payments		(849)		(27,454)		(28,303)	(42.99)

Net Income		49,141		1,082,250		1,131,391

Balance, September 30, 2011	$	1,172	$	30,835,712	$	30,836,884	41,929.37

The accompanying Notes to Financial Statements are an integral part of this statement.

Page 6 of 16

AEI INCOME & GROWTH FUND 25 LLC

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(1) The condensed statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements. The adjustments made to these condensed statements consist only of normal recurring adjustments. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the registrant's latest annual report on Form 10-K.

(2) Organization –

AEI Income & Growth Fund 25 LLC (“Company”), a Limited Liability Company, was formed on June 24, 2002 to acquire and lease commercial properties to operating tenants. The Company's operations are managed by AEI Fund Management XXI, Inc. (“AFM”), the Managing Member. Robert P. Johnson, the President and sole director of AFM, serves as the Special Managing Member. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AEI Fund Management, Inc. (“AEI”), an affiliate of AFM, performs the administrative and operating functions for the Company.

The terms of the offering called for a subscription price of $1,000 per LLC Unit, payable on acceptance of the offer. The Company commenced operations on September 11, 2003 when minimum subscriptions of 1,500 LLC Units ($1,500,000) were accepted. The offering terminated May 12, 2005, when the extended offering period expired. The Company received subscriptions for 42,434.763 Units. Under the terms of the Operating Agreement, the Limited Members and Managing Members contributed funds of $42,434,763 and $1,000, respectively. The Company shall continue until December 31, 2053, 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.

Page 7 of 16

AEI INCOME & GROWTH FUND 25 LLC

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 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) Investments in Real Estate –

On October 20, 2010, the Company purchased a 21% interest in a Scott & White Clinic in College Station, Texas for $771,868. The Company incurred $16,922 of acquisition expenses related to the purchase that were expensed. The property is leased to Scott & White Healthcare under a Lease Agreement with a remaining primary term of 9.7 years (as of the date of purchase) and initial annual rent of $64,680 for the interest purchased. The remaining interests in the property were purchased by AEI Net Lease Income & Growth Fund XX Limited Partnership and AEI Income & Growth Fund XXI Limited Partnership, affiliates of the Company.

On October 21, 2011, the Company purchased a 72% interest in a Staples store in Clermont, Florida for $2,307,312. The property is leased to Staples the Office Superstore East, Inc. under a Lease Agreement with a remaining primary term of 8.4 years and initial annual rent of $187,795 for the interest purchased. The remaining interest in the property was purchased by AEI Income & Growth Fund XXII Limited Partnership, an affiliate of the Company.

(4) 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.

Page 8 of 16

AEI INCOME & GROWTH FUND 25 LLC

NOTES TO FINANCIAL STATEMENTS

(Continued)

(5) Discontinued Operations –

During 2010, the Company sold 47.0843% of the Applebee’s restaurant in Macedonia, Ohio, in six separate transactions, to unrelated third parties. The Company received total net sale proceeds of $1,571,988, which resulted in a net gain of $218,688. The cost and related accumulated depreciation of the interests sold was $1,475,997 and $122,697, respectively. For the nine months ended September 30, 2010, the net gain was $90,911.

During the nine months ended September 30, 2011, the Company sold an additional 27.2553% of the Applebee’s restaurant in Macedonia, Ohio, in four separate transactions, to unrelated third parties. The Company received net sale proceeds of $918,644, which resulted in a net gain of $135,269. The cost and related accumulated depreciation of the interests sold was $854,398 and $71,023, respectively.

On October 19, 2011, the Company sold its remaining 5.3036% interest in the Applebee’s restaurant in Macedonia, Ohio to an unrelated third party. The Company received net sale proceeds of approximately $177,400, which resulted in a net gain of approximately $25,000. The cost and related accumulated depreciation of the interest sold was $166,259 and $13,819, respectively. At September 30, 2011 and December 31, 2010, the property was classified as Real Estate Held for Sale with a carrying value of $152,440 and $935,815, respectively.

The financial results for this property are reflected as Discontinued Operations in the accompanying financial statements. The following are the results of discontinued operations for the periods ended September 30:

		Three Months Ended September 30,				Nine Months Ended September 30,
		2011		2010		2011		2010

Rental Income	$	7,635	$	41,574	$	44,444	$	136,049
Property Management Expenses		(153)		(555)		(267)		(1,202)
Gain on Disposal of Real Estate		62,012		30,910		135,269		90,911
Income from Discontinued Operations	$	69,494	$	71,929	$	179,446	$	225,758

(6) Fair Value Measurements –

As of September 30, 2011, the Company had no assets or liabilities measured at fair value on a recurring basis or nonrecurring basis.

Page 9 of 16

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 Company’s financial condition and results of operations, including the following:

—

Market and economic conditions which affect the value of the properties the Company 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 Members;

—

resolution by the Managing Members of conflicts with which they may be confronted;

—

the success of the Managing Members 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.

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 investments in real estate and the allocation by AEI Fund Management, Inc. of expenses to the Company as opposed to other funds they manage.

The Company purchases properties and records them in the financial statements at cost (not including acquisition expenses). The Company tests long-lived assets for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Company will hold and operate, management determines whether impairment has occurred by comparing the property’s probability-weighted future undiscounted cash flows to its current carrying value. For properties held for sale, management determines whether impairment has occurred by comparing the property’s estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value. Changes in these assumptions or analysis may cause material changes in the carrying value of the properties.

AEI Fund Management, Inc. allocates expenses to each of the funds they manage primarily on the basis of the number of hours devoted by their employees to each fund’s affairs. They also allocate expenses at the end of each month that are not directly related to a fund’s operations based upon the number of investors in the fund and the fund’s capitalization relative to other funds they manage. The Company reimburses these expenses subject to detailed limitations contained in the Operating Agreement.

Page 10 of 16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

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, 2011 and 2010, the Company recognized rental income from continuing operations of $1,949,649 and $1,869,575, respectively. In 2011, rental income increased due to additional rent received from one property acquisition in 2010 and rent increases on five properties. Based on the scheduled rent for the properties owned as of October 31, 2011, the Company expects to recognize rental income from continuing operations of approximately $2,635,000 and $2,815,000 in 2011 and 2012, respectively.

For the nine months ended September 30, 2011 and 2010, the Company incurred LLC administration expenses from affiliated parties of $269,801 and $270,522, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Members. During the same periods, the Company incurred LLC administration and property management expenses from unrelated parties of $52,400 and $41,976, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs.

For the nine months ended September 30, 2011 and 2010, the Company recognized interest income of $12,655 and $10,916, respectively. In 2011, interest income increased due to the Company having more money invested in a money market account due to property sales.

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 of the property to discontinued operations. For the nine months ended September 30, 2011, the Company recognized income from discontinued operations of $179,446, representing rental income less property management expenses of $44,177 and gain on disposal of real estate of $135,269. For the nine months ended September 30, 2010, the Company recognized income from discontinued operations of $225,758 representing rental income less property management expenses of $134,847 and gain on disposal of real estate of $90,911.

Page 11 of 16

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

During the nine months ended September 30, 2011, the Company's cash balances increased $830,741 as a result of cash generated from the sale of property, which was partially offset by distributions and redemption payments paid to the Members in excess of cash generated from operating activities. During the nine months ended September 30, 2010, the Company's cash balances increased $573,112 as a result of cash generated from the sale of property, which was partially offset by distributions and redemption payments paid to the Members in excess of cash generated from operating activities.

Net cash provided by operating activities increased from $1,607,625 in 2010 to $1,682,015 in 2011 as a result of net timing differences in the collection of payments from the tenants and the payment of expenses, which was partially offset by a decrease in total rental and interest income in 2011 and an increase in LLC administration and property management expenses in 2011.

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, 2011 and 2010, the Company generated cash flow from the sale of real estate of $918,644 and $630,957, respectively.

Page 12 of 16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

On October 20, 2010, the Company purchased a 21% interest in a Scott & White Clinic in College Station, Texas for $771,868. The property is leased to Scott & White Healthcare under a Lease Agreement with a remaining primary term of 9.7 years (as of the date of purchase) and initial annual rent of $64,680 for the interest purchased. The remaining interests in the property were purchased by AEI Net Lease Income & Growth Fund XX Limited Partnership and AEI Income & Growth Fund XXI Limited Partnership, affiliates of the Company.

The Company's primary use of cash flow, other than investment in real estate, 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 week after the end of each quarter. The Company attempts to maintain a stable distribution rate from quarter to quarter. Redemption payments are paid to redeeming Members on a semi-annual basis.

For the nine months ended September 30, 2011 and 2010, the Company declared distributions of $1,634,847 and $1,634,849, respectively. Pursuant to the Operating Agreement, distributions of Net Cash Flow were allocated 97% to the Limited Members and 3% to the Managing Members. Distributions of Net Proceeds of Sale were allocated 99% to the Limited Members and 1% to the Managing Members. The Limited Members received distributions of $1,585,802 and $1,585,803 and the Managing Members received distributions of $49,045 and $49,046 for the periods, respectively. In December 2010, the Company declared a special distribution of net sale proceeds of $106,768, which resulted in a higher distribution payable at December 31, 2010.

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 more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company.

On April 1, 2011, two Limited Members redeemed a total of 42.99 Units for $27,454 in accordance with the Operating Agreement. On April 1, 2010, two Limited Members redeemed a total of 46.92 Units for $29,702 in accordance with the Operating Agreement. The Company acquired these Units using Net Cash Flow from operations. In prior years, eight Limited Members redeemed a total of 415.48 Units for $305,680. The redemptions increase the remaining Limited Members’ ownership interest in the Company. As a result of these redemption payments and pursuant to the Operating Agreement, the Managing Members received distributions of $849 and $918 in 2011 and 2010, respectively.

The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Company obligations on both a short-term and long-term basis.

Page 13 of 16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

The Economy and Market Conditions

The impact of conditions in the current economy, including the turmoil in the credit markets, has adversely affected many real estate investment funds. However, the absence of mortgage financing on the Company’s properties eliminates the risks of foreclosure and debt-refinancing that can negatively impact the value and distributions of leveraged real estate investment funds. Nevertheless, a prolonged economic downturn may adversely affect the operations of the Company’s tenants and their cash flows. If a tenant were to default on its lease obligations, the Company’s income would decrease, its distributions would likely be reduced and the value of its properties might decline.

ITEM 3. QUANTITATIVE & 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 Member of the Company 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 Member 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 Member, 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.

Page 14 of 16

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 1A. RISK FACTORS.

Not required for a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES & USE OF PROCEEDS.

(a) None.

(b) Not applicable.

(c) Pursuant to Section 7.7 of the Operating Agreement, each Limited Member has the right to present Units to the Company for purchase by submitting notice to the Managing Member during January or July of each year. The purchase price of the Units is equal to 80% of the net asset value per Unit, as of the first business day of January or July of each year, as determined by the Managing Member in accordance with the provisions of the Operating Agreement. Units tendered to the Company during January and July are redeemed on April 1st and October 1st, respectively, of each year subject to the following limitations. The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year. In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company. During the period covered by this report, the Company did not purchase any Units.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

31.1	Certification of Chief Executive Officer of 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.

Page 15 of 16

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 11, 2011	AEI Income & Growth Fund 25 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)

Page 16 of 16

AEI INCOME & GROWTH FUND 25 LLC - FORM 10-Q - November 14, 2011

Attached files

AEI INCOME & GROWTH FUND 25 LLC Reports