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: 000-49653
AEI INCOME & GROWTH FUND 24 LLC
(Exact name of registrant 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
(Registrant's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (232.405 of this chapter)
during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
[ ] Yes [ ] No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
AEI INCOME & GROWTH FUND 24 LLC
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited):
Balance Sheet as of September 30, 2009 and December 31, 2008
Statements for the Periods ended September 30, 2009 and 2008:
Income
Cash Flows
Changes in Members' Equity (Deficit)
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 INCOME & GROWTH FUND 24 LLC
BALANCE SHEET
SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
ASSETS
2009 2008
CURRENT ASSETS:
Cash $ 473,541 $ 519,844
INVESTMENTS IN REAL ESTATE:
Land 6,483,755 6,483,755
Buildings and Equipment 11,510,985 11,510,985
Accumulated Depreciation (1,370,808) (1,026,399)
----------- -----------
16,623,932 16,968,341
Real Estate Held for Sale 1,905,292 1,905,292
----------- -----------
Net Investments in Real Estate 18,529,224 18,873,633
----------- -----------
Total Assets $19,002,765 $19,393,477
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 69,670 $ 83,589
Distributions Payable 309,278 368,806
Unearned Rent 52,963 37,227
----------- -----------
Total Current Liabilities 431,911 489,622
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members (17,719) (8,132)
Limited Members, $1,000 per Unit;
50,000 Units authorized; 24,831 Units issued;
24,430 Units outstanding 18,588,573 18,911,987
----------- -----------
Total Members' Equity 18,570,854 18,903,855
----------- -----------
Total Liabilities and Members' Equity $19,002,765 $19,393,477
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
Three Months Ended Nine Months Ended
9/30/09 9/30/08 9/30/09 9/30/08
RENTAL INCOME $ 347,271 $ 286,382 $1,041,813 $ 754,428
EXPENSES:
LLC Administration -
Affiliates 52,434 53,629 157,293 162,918
LLC Administration and
Property Management -
Unrelated Parties 3,798 7,214 33,634 27,470
Depreciation 115,110 87,399 344,409 232,627
--------- --------- ---------- ---------
Total Expenses 171,342 148,242 535,336 423,015
--------- --------- ---------- ---------
OPERATING INCOME 175,929 138,140 506,477 331,413
OTHER INCOME:
Interest Income 752 17,601 2,350 143,214
--------- --------- ---------- ---------
INCOME FROM CONTINUING
OPERATIONS 176,681 155,741 508,827 474,627
Income from Discontinued
Operations 28,295 28,747 85,589 99,389
--------- --------- ---------- ---------
NET INCOME $ 204,976 $ 184,488 $ 594,416 $ 574,016
========= ========= ========== =========
NET INCOME ALLOCATED:
Managing Members $ 6,149 $ 5,534 $ 17,832 $ 17,220
Limited Members 198,827 178,954 576,584 556,796
--------- --------- ---------- ---------
$ 204,976 $ 184,488 $ 594,416 $ 574,016
========= ========= ========== =========
NET INCOME PER LLC UNIT:
Continuing Operations $ 7.02 $ 6.19 $ 20.20 $ 18.82
Discontinued Operations 1.12 1.14 3.40 3.94
--------- --------- ---------- ---------
Total $ 8.14 $ 7.33 $ 23.60 $ 22.76
========= ========= ========== =========
Weighted Average Units
Outstanding 24,430 24,430 24,430 24,465
========= ========= ========== =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 594,416 $ 574,016
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 344,409 232,627
Increase in Receivables 0 (4,358)
Decrease in Payable to
AEI Fund Management, Inc. (13,919) (41,181)
Increase in Unearned Rent 15,736 5,482
----------- -----------
Total Adjustments 346,226 192,570
----------- -----------
Net Cash Provided By
Operating Activities 940,642 766,586
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate 0 (2,215,803)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions Paid to Members (986,945) (1,470,261)
Redemption Payments 0 (77,068)
----------- -----------
Net Cash Used For
Financing Activities (986,945) (1,547,329)
----------- -----------
NET DECREASE IN CASH (46,303) (2,996,546)
CASH, beginning of period 519,844 6,697,609
----------- -----------
CASH, end of period $ 473,541 $ 3,701,063
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 24 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2007 $ 13,074 $19,712,161 $19,725,235 24,534.20
Distributions Declared (31,597) (1,089,001) (1,120,598)
Redemption Payments (2,312) (74,756) (77,068) (104.00)
Net Income 17,220 556,796 574,016
-------- ----------- ----------- ----------
BALANCE, September 30, 2008 $ (3,615) $19,105,200 $19,101,585 24,430.20
======== =========== =========== ==========
BALANCE, December 31, 2008 $ (8,132) $18,911,987 $18,903,855 24,430.20
Distributions Declared (27,419) (899,998) (927,417)
Net Income 17,832 576,584 594,416
-------- ----------- ----------- ----------
BALANCE, September 30, 2009 $(17,719) $18,588,573 $18,570,854 24,430.20
======== =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 24 LLC
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 Income & Growth Fund 24 LLC ("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 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 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
(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 December 17, 2007, the Company purchased a 35% interest
in a parcel of land in Fredericksburg, Virginia for
$1,782,295. The Company obtained title to the land in the
form of an undivided fee simple interest in the 35% interest
purchased. Simultaneous with the purchase of the land, the
Company entered into a Project Construction and Development
Financing Agreement under which the Company advanced funds
to Silver-Honaker Development Company, LLC ("Silver") for
the construction of a Dick's Sporting Goods store on the
site. The Company's share of the total acquisition costs,
including the cost of the land, was $4,052,921. The
remaining interests in the property were purchased by AEI
Income & Growth Fund 23 LLC, AEI Income & Growth Fund 25 LLC
and AEI Income & Growth Fund 26 LLC, affiliates of the
Company.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
The property is leased to Dick's Sporting Goods, Inc. under
a Lease Agreement with a primary term of 10 years and
initial annual rent of $284,466 for the interest purchased.
Pursuant to the Lease, the tenant commenced paying rent on
May 8, 2008. Pursuant to the development agreement, for the
period from December 17, 2007 through May 7, 2008, Silver
paid the Company interest at a rate of 6.75% on the purchase
price of the land and the amounts advanced for construction
of the store. Pursuant to the Lease, any improvements to
the land during the term of the Lease become the property of
the Company.
On October 2, 2008, the Company purchased a 45% interest in
a Fresenius Medical Center in Shreveport, Louisiana for
$1,113,416. The property is leased to Bio-Medical
Applications of Louisiana, LLC, a subsidiary of Fresenius
Medical Care Holdings, Inc., under a Lease Agreement with a
remaining primary term of 9.8 years and initial annual rent
of $83,880 for the interest purchased. The remaining
interest in the property was purchased by AEI Income &
Growth Fund XXI Limited Partnership, an affiliate of the
Company.
On October 6, 2008, the Company purchased a 34% interest in
a Best Buy store in Lake Geneva, Wisconsin for $2,083,526.
The property is leased to Best Buy Stores, L.P. under a
Lease Agreement with a remaining primary term of 10.3 years
and initial annual rent of $148,699 for the interest
purchased. The remaining interests in the property were
purchased by AEI Income & Growth Fund XXII Limited
Partnership and AEI Income & Growth Fund 27 LLC, affiliates
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.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(5) Discontinued Operations -
In November 2007, Kona Restaurant Group, Inc. (KRG), the
tenant of the Johnny Carino's restaurant in Littleton,
Colorado, informed the Company that it was closing the
restaurant due to lower than expected sales and operating
losses. In March 2008, the Company and KRG entered into an
agreement to amend the Lease to reduce the current annual
rent for the property by 50% to $116,288. The Company is
actively marketing the property for sale. As part of the
agreement, Fired Up, Inc., the parent company of KRG and
guarantor of the Lease, agreed to provide a Note to the
Company with a principal balance equal to the difference
between the net proceeds from the sale of the property and
the Company's original cost of the property. The Note will
bear interest at a 7% rate with scheduled payments over a
five-year term and a balloon payment at the end of the term.
At September 30, 2009 and December 31, 2008, the property
was classified as Real Estate Held for Sale with a book
value of $1,905,292.
During the first nine months of 2009 and 2008, the Company
distributed net sale proceeds of $20,202 and $101,010 to the
Limited and Managing Members as part of their quarterly
distributions, which represented a return of capital of
$0.82 and $4.09 per LLC Unit, 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 Nine Months Ended
9/30/09 9/30/08 9/30/09 9/30/08
Rental Income $ 29,072 $ 29,072 $ 87,216 $ 106,597
Property Management Expenses (777) (325) (1,627) (7,208)
-------- -------- -------- ---------
Income from Discontinued
Operations $ 28,295 $ 28,747 $ 85,589 $ 99,389
======== ======== ======== =========
(6) Fair Value Measurements -
The Company adopted new guidance for measuring financial
assets and liabilities at fair value on a recurring basis on
January 1, 2008 and for certain nonfinancial assets and
liabilities on January 1, 2009. The Company has no assets
or liabilities measured at fair value on a recurring basis
or nonrecurring basis that would require disclosure under
this new guidance.
AEI INCOME & GROWTH FUND 24 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(7) Subsequent Events -
The Company 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 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 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)
Prior to January 1, 2009, the Company purchased properties
and recorded them in the financial statements at cost (including
capitalized acquisition expenses). For acquisitions completed on
or after January 1, 2009, acquisition-related transaction costs
will be expensed as incurred as a result of the Company adopting
new guidance on business combinations that expands the scope of
acquisition accounting. 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 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. 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.
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, 2009 and 2008, the
Company recognized rental income from continuing operations of
$1,041,813 and $754,428, respectively. In 2009, rental income
increased due to additional rent received from three property
acquisitions in 2008 and rent increases on three properties.
For the nine months ended September 30, 2009 and 2008, the
Company incurred LLC administration expenses from affiliated
parties of $157,293 and $162,918, 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 $33,634
and $27,470, 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, 2009 and 2008, the
Company recognized interest income of $2,350 and $143,214,
respectively. In 2009 interest income decreased due to the
Company having less money invested in a money market account due
to property acquisitions and lower money market rates in 2009.
In addition, the Company received $67,450 of interest income on
construction advances in 2008.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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, 2009 and
2008, the Company recognized income from discontinued operations
of $85,589 and $99,389, respectively, representing rental income
less property management expenses.
In November 2007, Kona Restaurant Group, Inc. (KRG), the
tenant of the Johnny Carino's restaurant in Littleton, Colorado,
informed the Company that it was closing the restaurant due to
lower than expected sales and operating losses. In March 2008,
the Company and KRG entered into an agreement to amend the Lease
to reduce the current annual rent for the property by 50% to
$116,288. The Company is actively marketing the property for
sale. As part of the agreement, Fired Up, Inc., the parent
company of KRG and guarantor of the Lease, agreed to provide a
Note to the Company with a principal balance equal to the
difference between the net proceeds from the sale of the property
and the Company's original cost of the property. The Note will
bear interest at a 7% rate with scheduled payments over a five-
year term and a balloon payment at the end of the term. At
September 30, 2009 and December 31, 2008, the property was
classified as Real Estate Held for Sale with a book value of
$1,905,292.
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, 2009, the
Company's cash balances decreased $46,303 as a result of
distributions paid to the Members in excess of cash generated
from operating activities. During the nine months ended
September 30, 2008, the Company's cash balances decreased
$2,996,546 as a result of cash used to purchase property and
distributions paid to the Members in excess of cash generated
from operating activities.
Net cash provided by operating activities increased from
$766,586 in 2008 to $940,642 in 2009 as a result of an increase
in total rental and interest income in 2009, a decrease in LLC
administration and property management expenses in 2009 and by
net timing differences in the collection of payments from the
tenants and the payment of expenses.
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, 2008, the Company expended $2,215,803 to invest in
real properties (inclusive of acquisition expenses) as the
Company reinvested cash generated from property sales completed
in 2007.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On December 17, 2007, the Company purchased a 35% interest
in a parcel of land in Fredericksburg, Virginia for $1,782,295.
The Company obtained title to the land in the form of an
undivided fee simple interest in the 35% interest purchased.
Simultaneous with the purchase of the land, the Company entered
into a Project Construction and Development Financing Agreement
under which the Company advanced funds to Silver-Honaker
Development Company, LLC ("Silver") for the construction of a
Dick's Sporting Goods store on the site. The Company's share of
the total acquisition costs, including the cost of the land, was
$4,052,921. The remaining interests in the property were
purchased by AEI Income & Growth Fund 23 LLC, AEI Income & Growth
Fund 25 LLC and AEI Income & Growth Fund 26 LLC, affiliates of
the Company.
The property is leased to Dick's Sporting Goods, Inc.
under a Lease Agreement with a primary term of 10 years and
initial annual rent of $284,466 for the interest purchased.
Pursuant to the Lease, the tenant commenced paying rent on May 8,
2008. Pursuant to the development agreement, for the period from
December 17, 2007 through May 7, 2008, Silver paid the Company
interest at a rate of 6.75% on the purchase price of the land and
the amounts advanced for construction of the store. Pursuant to
the Lease, any improvements to the land during the term of the
Lease become the property of the Company.
On October 2, 2008, the Company purchased a 45% interest
in a Fresenius Medical Center in Shreveport, Louisiana for
$1,113,416. The property is leased to Bio-Medical Applications
of Louisiana, LLC, a subsidiary of Fresenius Medical Care
Holdings, Inc., under a Lease Agreement with a remaining primary
term of 9.8 years and initial annual rent of $83,880 for the
interest purchased. The remaining interest in the property was
purchased by AEI Income & Growth Fund XXI Limited Partnership, an
affiliate of the Company.
On October 6, 2008, the Company purchased a 34% interest
in a Best Buy store in Lake Geneva, Wisconsin for $2,083,526.
The property is leased to Best Buy Stores, L.P. under a Lease
Agreement with a remaining primary term of 10.3 years and initial
annual rent of $148,699 for the interest purchased. The
remaining interests in the property were purchased by AEI Income
& Growth Fund XXII Limited Partnership and AEI Income & Growth
Fund 27 LLC, 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, 2009 and 2008, the
Company declared distributions of $927,417 and $1,120,598,
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 $899,998
and $1,089,001 and the Managing Members received distributions of
$27,419 and $31,597 for the periods, respectively. In 2009,
distributions were lower due to a decrease in the distribution
rate per Unit, effective January 1, 2009.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
During the first nine months of 2009 and 2008, the Company
distributed net sale proceeds of $20,202 and $101,010 to the
Limited and Managing Members as part of their quarterly
distributions, which represented a return of capital of $0.82 and
$4.09 per LLC Unit, respectively.
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.
During 2009, the Company did not redeem any Units from the
Limited Members. On April 1, 2008, three Limited Members
redeemed a total of 104 Units for $74,756 in accordance with the
Operating Agreement. The Company acquired these Units using Net
Cash Flow from operations. In prior years, a total of thirteen
Limited Members redeemed 297.08 Units for $239,805. The
redemptions increase the remaining Limited Member's ownership
interest in the Company. As a result of these redemption
payments and pursuant to the Operating Agreement, the Managing
Members received distributions of $2,312 in 2008.
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.
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 Company'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 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.
Historically, the Company has sold properties at a gain
and distributed the gain proceeds as part of its regular
quarterly distributions, and to make special distributions on
occasion. The remaining sales proceeds were reinvested in
additional properties. Beginning in the fourth quarter of 2008,
general economic conditions caused the volume of property sales
to slow dramatically for all real estate sellers. In 2009, the
Company will likely complete fewer property sales than it has in
the past. Until property sales occur, quarterly distributions
going forward will reflect the distribution of net core rental
income and capital reserves, if any. Distribution rates in 2009
are expected to be variable and less than recent distribution
rates until such time as economic conditions allow the Company
to, once again, begin selling properties at acceptable prices and
generating gains for distribution.
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 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.
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.
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 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 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. During the period covered by this
report, the Company 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 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.
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 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
