Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Fiscal Year Ended: December 31, 2009
Commission file number: 000-53691
AEI INCOME & GROWTH FUND 27 LLC
(Exact name of registrant as specified in its charter)
State of Delaware 20-8657207
(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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Liability Company Units
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes [ ] No [X]
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. Yes [X] 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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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 Act). Yes [ ] No [X]
As of June 30, 2009, there were 866,344.7 Units of limited
membership interest outstanding and owned by nonaffiliates of the
registrant, which Units had an aggregate market value (based
solely on the price at which they were sold since there is no
ready market for such Units) of $8,663,447.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant has not incorporated any documents by reference
into this report.
PART I
ITEM 1. BUSINESS.
AEI Income & Growth Fund 27 LLC (the "Company" or the
"Registrant") is a limited liability company which was organized
pursuant to the laws of the State of Delaware on January 26,
2007. The registrant is comprised of AEI Fund Management XXI,
Inc. ("AFM"), as the Managing Member, Robert P. Johnson, the
President and sole director of AFM, as the Special Managing
Member, and purchasers of LLC Units as Limited Members. The
Company offered for sale up to $100,000,000 of limited membership
interests (the "Units") (10,000,000 Units at $10 per Unit)
pursuant to a registration statement effective November 19, 2007.
The Company commenced operations on June 5, 2008 when minimum
subscriptions of 150,000 LLC Units ($1,500,000) were accepted.
The offering terminated November 18, 2009 when the extended
offering period expired. The Company received subscriptions for
1,164,036.5 LLC Units. Under the terms of the Operating
Agreement, the Limited Members and Managing Members contributed
funds of $11,640,365 and $1,000, respectively.
The Company was organized to acquire existing and newly
constructed commercial properties, to lease such properties to
tenants under net leases, to hold such properties and to
eventually sell such properties. As of December 31, 2009, the
Company had purchased four properties, including partial
interests in three properties at a total cost of $6,242,852.
Included in this amount was $62,611 of acquisition costs that
were expensed as incurred as the result of the adoption of new
guidance on business combinations that became effective January
1, 2009. The properties are commercial, single tenant buildings
leased under net leases. The Company is continuing to review
various properties for acquisition until available subscription
proceeds are fully committed.
Although the registration statement indicates that no
properties will be acquired using debt financing, debt was used
to acquire the Starbucks store solely to finance its purchase
prior to the admission of Limited Members. The remaining
properties were acquired on a debt-free basis. The Company will
not finance properties in the future to obtain proceeds for new
property acquisitions. If it is required to do so, the Company
may incur short-term indebtedness to finance day-to-day cash flow
requirements (including cash flow necessary to repurchase Units).
The Company may borrow to finance the refurbishing of a property.
The Company will hold its properties until the Managing
Members determine that the sale or other disposition of the
properties is advantageous in view of the Company's investment
objectives. In deciding whether to sell properties, the Managing
Members will consider factors such as potential appreciation, net
cash flow and income tax considerations. The Company expects to
sell some or all of its properties prior to its final liquidation
and to reinvest the proceeds from such sales in additional
properties. The Company reserves the right, at the discretion of
the Managing Members, to either distribute proceeds from the sale
of properties to the Members or to reinvest such proceeds in
additional properties, provided that sufficient proceeds are
distributed to the Limited Members to pay federal and state
income taxes related to any taxable gain recognized as a result
of the sale. Subject to the approval of Limited Members holding
a majority of the outstanding Units, it is the intention of the
Managing Members to commence liquidation through the sale of the
Company's remaining properties approximately ten years after all
the available subscription proceeds are utilized for the purchase
of properties. If the Limited Members do not vote to liquidate
at that time, the normal operations of the Company will continue.
ITEM 1. BUSINESS. (Continued)
Leases
Although there are variations in the specific terms of the
leases, the following is a summary of the general terms of the
Company's leases. The properties are leased to various tenants
under net leases, which are classified as operating leases.
Under a net lease, the tenant is responsible for real estate
taxes, insurance, maintenance, repairs and operating expenses for
the property. For some leases, the Company is responsible for
repairs to the structural components of the building, the roof
and the parking lot. At the time the properties were acquired,
the remaining primary lease terms varied from 10 to 15 years.
The leases provide the tenants with four five-year renewal
options subject to the same terms and conditions as the primary
term. The leases provide for base annual rental payments, payable
in monthly installments, and contain rent clauses which entitle
the Company to receive additional rent in future years based on
stated rent increases.
Major Tenants
During 2009, three tenants each contributed more than ten
percent of the Company's total rental revenue. The major tenants
in aggregate contributed 90% of total rental revenue in 2009.
Because the Company has not completed its acquisition of
properties, it is not possible to determine which tenants will
contribute more than ten percent of the Company's rental revenue
in 2010 and future years. In the event that certain tenants
contribute more than ten percent of rental revenue in future
years, any failure of these major tenants could materially affect
the Company's net income and cash distributions.
Competition
The Company is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Company. At the time the Company elects to
dispose of its properties, it will be in competition with other
persons and entities to find buyers for its properties.
Employees
The Company has no direct employees. Management services
are performed for the Company by AEI Fund Management, Inc., an
affiliate of AFM.
ITEM 1A. RISK FACTORS.
Not required for a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not required for a smaller reporting company.
ITEM 2. PROPERTIES.
Investment Objectives
The Company's investment objectives are to acquire
existing or newly-developed commercial properties that provide
(i) regular rental income; (ii) growth in lease income through
rent escalation provisions; (iii) capital growth through
appreciation in the value of properties; (iv) reduced occupancy
risks as a result of long-term leases with creditworthy corporate
tenants; and (v) passive income that may be offset by eligible
passive losses from other investments for tax purposes. The
Company does not have a policy, and there is no limitation, as to
the amount or percentage of assets that may be invested in any
one property. However, to the extent possible, the Managing
Members attempt to diversify the type and location of the
properties.
Description of Properties
The Company's properties are commercial, single tenant
buildings leased to various tenants under net leases, which are
classified as operating leases. Although the registration
statement indicates that no properties will be acquired using
debt financing, debt was used to acquire the Starbucks store
solely to finance its purchase prior to the admission of Limited
Members. The remaining properties were acquired on a debt-free
basis. The Company holds an undivided fee simple interest in the
properties.
The Company's properties are subject to the general
competitive conditions incident to the ownership of single tenant
investment real estate. Since each property is leased under a
long-term lease, there is little competition until the Company
decides to sell the property. At this time, the Company will be
competing with other real estate owners, on both a national and
local level, in attempting to find buyers for the properties. In
the event of a tenant default, the Company would be competing
with other real estate owners, who have property vacancies, to
attract a new tenant to lease the property. The Company's
tenants operate in industries that are very competitive and can
be affected by factors such as changes in regional or local
economies, seasonality and changes in consumer preference.
The following table is a summary of the properties that
the Company acquired and owned as of December 31, 2009.
Annual Annual
Purchase Property Lease Rent Per
Property Date Cost Tenant Payment Sq. Ft.
Starbucks Store Starbucks
Shreveport, LA 2/5/08 $1,369,132 Corporation $ 93,000 $50.99
Best Buy Store
Lake Geneva, WI Best Buy
(33%) 10/6/08 $2,052,214 Stores, L.P. $144,325 $14.40
Staples Store Staples the
Vernon Hills, IL Office Superstore
(30%) 5/22/09 $1,591,987(1) East, Inc. $132,135 $23.00
Tractor Supply Company Store
Rapid City, SD Tractor Supply
(37%) 8/6/09 $1,166,908 Company $ 83,250 $11.78
(1) Does not include acquisition costs that were expensed.
ITEM 2. PROPERTIES. (Continued)
The properties listed above with a partial ownership
percentage are owned with affiliates of the Company. The
remaining interests in the Best Buy store are owned by AEI Income
& Growth Fund XXII Limited Partnership and AEI Income & Growth
Fund 24 LLC. The remaining interest in the Staples store is
owned by AEI Net Lease Income & Growth Fund XX Limited
Partnership. The remaining interest in the Tractor Supply
Company store is owned by AEI Income & Growth Fund XXI Limited
Partnership.
The Company accounts for properties owned as tenants-in-
common with affiliated entities and/or unrelated third parties
using the proportionate consolidation method. Each tenant-in-
common owns a separate, undivided interest in the properties.
Any tenant-in-common that holds more than a 50% interest does not
control decisions over the other tenant-in-common interests. The
financial statements reflect only this Company's percentage share
of the properties' land, building and equipment, liabilities,
revenues and expenses.
At the time the properties were acquired, the remaining
primary lease terms varied from 10 to 15 years. The leases
provide the tenants with four five-year renewal options subject
to the same terms and conditions as the primary term.
Pursuant to the lease agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The Managing Members believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Company's operations.
For tax purposes, the Company's properties are depreciated
under the Modified Accelerated Cost Recovery System (MACRS). The
largest depreciable component of a property is the building which
is depreciated, using the straight-line method, over 39 years.
The remaining depreciable components of a property are personal
property and land improvements which are depreciated, using an
accelerated method, over 5 and 15 years, respectively. Since the
Company has tax-exempt Members, the Company is subject to the
rules of Section 168(h)(6) of the Internal Revenue Code which
requires a percentage of the properties' depreciable components
to be depreciated over longer lives using the straight-line
method. In general, the federal tax basis of the properties for
tax depreciation purposes will be the same as the basis for book
depreciation purposes.
At December 31, 2009, all properties listed above were
100% occupied.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-
HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
(a) As of December 31, 2009, there were 307 holders of
record of the registrant's LLC Units. There is no other class of
security outstanding or authorized. The registrant's Units are
not a traded security in any market. During the period covered
by this report, the Company did not sell any equity securities
that are not registered under the Securities Act of 1933.
Cash distributions of $12,792 and $3,547 were made to the
Managing Members and $413,593 and $114,681 were made to the
Limited Members for 2009 and 2008, respectively. The
distributions were made on a quarterly basis and represent Net
Cash Flow, as defined, and a partial return of contributed
capital. These distributions should not be compared with
dividends paid on capital stock by corporations.
(b) The registration statement for the offering (No. 333-
144961) was declared effective on November 19, 2007. The
offering commenced on November 19, 2007 and terminated November
18, 2009, when the extended offering period expired. AEI
Securities, Inc. ("ASI") is the dealer manager of the offering.
The registration statement covers 10,000,000 Units of limited
liability company interest at an aggregate price of up to $100
million. The Company sold 1,164,036.5 Units for gross offering
proceeds of $11,640,365.
From gross offering proceeds, the Company paid $1,119,618
in selling commissions to ASI, an affiliate of the Managing
Members. Of this amount, $730,728 was re-allowed by ASI to
participating broker-dealers not affiliated with the Managing
Members. The gross offering proceeds were further reduced by
underwriting discounts of $17,032 and other organization and
syndication costs of $582,018 of which $344,658 was paid to AEI
Fund Management, Inc., an affiliate of the Managing Members, for
costs incurred in providing services related to managing the
offering and organization of the Company. From subscription
proceeds, the Company incurred commissions, organization and
syndication costs totaling $1,718,668.
From the net offering proceeds, the Company expended
$6,242,852 to acquire real estate of which $6,009,207 represented
cash paid to unaffiliated sellers of real estate, $90,138
represented an acquisition administration fee paid to the
Managing Member and $143,507 represented cash paid to reimburse
AEI Fund Management, Inc. for costs incurred in providing
services and direct expenses related to the acquisition of
properties on behalf of the Company.
(c) Beginning in May 2010, 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. From May
2010 through November 2011, the purchase price of the Units is
equal to 90% 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. After November 2011, the purchase price is
equal to 95% of the net asset value per Unit. The purchase price
is equal to 100% of the net asset value per Unit in the case of
Units of a deceased investor, who purchased the Units in the
initial offering and who is a natural person, including Units
held by an investor that is an IRA or other qualified plan for
which the deceased person was the primary beneficiary, or Units
held by an investor that is a grantor trust for which the
deceased person was the grantor.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-
HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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 last
three months of 2009, the Company did not purchase any Units.
Other Information
The Company is required, pursuant to FINRA Rule 2810, to
disclose in each annual report distributed to Limited Members a
per Unit estimated value, the method by which it was developed
and the date of the data used to develop the estimated value.
During the Company's offering and for the 18 months after
completion of the offering (through May 2011), the value of a
Unit will be deemed to be $10.00. This deemed value is based
solely on the offering price, without regard to the assets and
liabilities of the Company, the cash flow of the Company, or any
other valuation factors. However, please note that there is no
public trading market for the Units nor is one ever expected to
develop and there can be no assurance that Limited Members could
receive $10 per Unit if such a market did exist and they sold
their Units or that they will be able to receive such amount for
their Units in the future. In addition, the Company has not
performed an evaluation of the Company properties and, therefore,
this valuation is not based upon the value of the Company
properties, nor does it represent the amount Limited Members
would receive if the Company properties were sold and the
proceeds distributed to the Limited Members in a liquidation of
the Company, which amount would most likely be less than $10 per
Unit as a result of the fact that, at the time the Company is
purchasing its properties, the amount of funds available for
investment in properties is approximately 15% less than the
offering proceeds due to the payment of organization and offering
expenses, including selling commissions, as described in more
detail in the Company's Prospectus.
ITEM 6. SELECTED FINANCIAL DATA.
Not required for a smaller reporting company.
ITEM 7. 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.
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 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 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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 year ended December 31, 2009, the Company
recognized rental income of $351,525, representing twelve months
rent from two properties acquired during 2008 and rent from two
properties acquired during the period. At December 31, 2009, the
scheduled annual rent for the properties was $452,710. For the
year ended December 31, 2008, the Company recognized rental
income of $118,322, representing rent from two properties
acquired during the period.
For the years ended December 31, 2009 and 2008, the
Company incurred LLC administration expenses from affiliated
parties of $89,435 and $33,990, 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 $14,053
and $4,834, 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. As the Company raised additional
subscription proceeds and purchased additional properties, the
administration and property management expenses increased.
For the year ended December 31, 2009, the Company incurred
property acquisition expenses of $62,611. These costs were
expensed as incurred as the result of the adoption of new
guidance on business combinations that became effective January
1, 2009.
For the years ended December 31, 2009 and 2008, the
Company recognized interest income of $42,167 and $9,663,
respectively. In 2009, interest income increased as result of
$23,603 of interest received on construction advances in 2009 and
the Company had more subscription proceeds temporarily invested
in a money market account.
For the year ended December 31, 2008, interest expense
related to the Note on the Starbucks store in Shreveport,
Louisiana was $22,528. The Note called for interest at the prime
rate minus 0.25% with the interest due on the first day of each
month.
ITEM 7. 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
The Company's primary sources of cash are proceeds from
the sale of Units, interest income, rental income and proceeds
from the sale of property. Its primary uses of cash are
investment in real properties, payment of expenses involved in
the sale of Units, the management of properties, the organization
and administration of the Company, and the payment of
distributions.
The Company generated $236,243 of cash from operations
during the year ended December 31, 2009, representing net income
of $71,081, a non-cash expense of $156,512 for depreciation and
$8,650 in net timing differences in the collection of payments
from the tenants and the payment of expenses. During this
period, cash from operations was reduced by $62,611 of
acquisition expenses related to the purchase of real estate.
Pursuant to new accounting guidance, these expenses were
reflected as operating cash outflows. However, pursuant to the
Company's Operating Agreement, acquisition expenses are funded
with subscription proceeds. The Company generated $87,583 of
cash from operations during the year ended December 31, 2008,
representing net income of $10,906, a non-cash expense of $55,727
for depreciation and $20,950 in 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 year ended December 31,
2009, the Company expended $2,362,478 to invest in real
properties. On May 22, 2009, the Company purchased a 30%
interest in a Staples store in Vernon Hills, Illinois for
$1,591,987. In addition, during the period, the Company expended
$770,491 for the construction of the Tractor Supply store in
Rapid City, South Dakota.
During the year ended December 31, 2008, the Company
expended $3,817,763 to invest in real properties (inclusive of
acquisition expenses). On February 5, 2008, the Company
purchased a Starbucks store in Shreveport, Louisiana for
$1,369,132. On October 6, 2008, the Company purchased a 33%
interest in a Best Buy store in Lake Geneva, Wisconsin for
$2,052,214. On November 21, 2008, the Company purchased a 37%
interest in a parcel of land in Rapid City, South Dakota for
$353,565, including acquisition expenses. Simultaneous with the
purchase of the land, the Company entered into a Development
Financing Agreement under which the Company advanced funds for
the construction of a Tractor Supply Company store on the site.
Through December 31, 2008, the Company had advanced $42,852 for
the construction of the building.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
In order to facilitate the purchase of its first property,
the Company entered into a Line of Credit Agreement with Fidelity
Bank, Edina, Minnesota, for $1,301,000. The Note was due on
August 1, 2008, and was secured by all of the Company's assets
and was guaranteed by the Special Managing Member and AEI Capital
Corporation, the parent company of the Managing Member. On June
5, 2008, the Company paid the outstanding principal and accrued
interest due on the Note. Although the registration statement
indicates that no properties will be acquired using debt
financing, debt was used to acquire this property solely to
finance its purchase prior to the admission of Limited Members.
No property will be acquired using debt financing after the
initial admission of Limited Members.
During the offering of Units, the Company's primary source
of cash flow was from the sale of LLC Units. The Company
commenced the offering of LLC Units to the public through a
registration statement that became effective November 19, 2007
and continued until November 18, 2009, when the extended offering
period expired. The Company raised a total of $11,640,365 from
the sale of 1,164,036.5 Units. From subscription proceeds, the
Company incurred organization and syndication costs (which
constitute a reduction of capital) of $1,718,668.
After completion of the acquisition phase, the Company's
primary use of cash flow will be distribution 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.
For the years ended December 31, 2009 and 2008, the Company
declared distributions of $426,385 and $118,228, respectively,
which were allocated 97% to the Limited Members and 3% to the
Managing Members.
Beginning in May 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.
The Operating Agreement requires that all proceeds from
the sale of Units, subject to a reasonable reserve for ongoing
operations, be invested or committed to investment in properties
by the later of two years after the date of the registration
statement or twelve months after the offering terminates. As of
December 31, 2009, the Company had no formal contractual
commitments to expend capital.
Until capital is invested in properties, the Company will
remain extremely liquid. After completion of property
acquisitions, the Company will attempt to maintain a cash reserve
of only approximately .5% of subscription proceeds. Because
properties are purchased for cash and leased under net leases,
this is considered adequate to satisfy most contingencies.
ITEM 7. 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 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.
The Company's plan was to periodically sell properties to
generate capital gains that would be included in the Company's
regular quarterly distributions and to make special distributions
on occasion. 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 2008 and 2009, the
Company did not complete any property sales. 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 2010 are expected to be variable
and less than historical distribution rates until such time as
economic conditions allow the Company to begin selling properties
at acceptable prices and generating gains for distribution.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See accompanying index to financial statements.
AEI INCOME & GROWTH FUND 27 LLC
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Balance Sheet as of December 31, 2009 and 2008
Statements for the Years Ended December 31, 2009 and 2008:
Income
Cash Flows
Changes in Members' Equity (Deficit)
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members:
AEI Income & Growth Fund 27 LLC
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI Income
& Growth Fund 27 LLC (a Delaware limited liability company) as of
December 31, 2009 and 2008 and the related statements of income,
cash flows and changes in members' equity for the years then
ended. The Company's management is responsible for these
financial statements. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the company's internal control over
financial reporting. Accordingly, we express no such opinion.
An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of AEI Income & Growth Fund 27 LLC as of December 31, 2009 and
2008, and the results of its operations and its cash flows for
the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/Boulay, Heutmaker, Zibell & Co. P.L.L.P.
Certified Public Accountants
Minneapolis, Minnesota
March 29, 2010
AEI INCOME & GROWTH FUND 27 LLC
BALANCE SHEET
DECEMBER 31
ASSETS
2009 2008
CURRENT ASSETS:
Cash $ 3,656,527 $ 1,059,127
Receivables 0 2,955
----------- -----------
Total Current Assets 3,656,527 1,062,082
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 1,279,635 904,146
Buildings and Equipment 4,900,606 2,870,765
Construction in Progress 0 42,852
Accumulated Depreciation (212,239) (55,727)
----------- -----------
Net Investments in Real Estate 5,968,002 3,762,036
----------- -----------
Total Assets $ 9,624,529 $ 4,824,118
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 29,600 $ 23,905
Distributions Payable 134,820 70,507
----------- -----------
Total Current Liabilities 164,420 94,412
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members (25,073) (14,413)
Limited Members, $10 per Unit;
10,000,000 Units authorized;
1,164,037 and 567,726 Units issued and
outstanding in 2009 and 2008, respectively 9,485,182 4,744,119
----------- -----------
Total Members' Equity 9,460,109 4,729,706
----------- -----------
Total Liabilities and Members' Equity $ 9,624,529 $ 4,824,118
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 27 LLC
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
2009 2008
RENTAL INCOME $ 351,525 $ 118,322
EXPENSES:
LLC Administration - Affiliates 89,435 33,990
LLC Administration and Property
Management - Unrelated Parties 14,053 4,834
Property Acquisition 62,611 0
Depreciation 156,512 55,727
----------- -----------
Total Expenses 322,611 94,551
----------- -----------
OPERATING INCOME 28,914 23,771
OTHER INCOME (EXPENSE):
Interest Income 42,167 9,663
Interest Expense 0 (22,528)
----------- -----------
NET INCOME $ 71,081 $ 10,906
=========== ===========
NET INCOME (LOSS) ALLOCATED:
Managing Members $ 2,132 $ (11,904)
Limited Members 68,949 22,810
----------- -----------
$ 71,081 $ 10,906
=========== ===========
NET INCOME PER LLC UNIT $ .08 $ .07
=========== ===========
Weighted Average Units Outstanding -
Basic and Diluted 827,187 330,872
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 27 LLC
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 71,081 $ 10,906
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 156,512 55,727
(Increase) Decrease in Receivables 2,955 (2,955)
Increase in Payable to
AEI Fund Management, Inc. 5,695 23,905
----------- -----------
Total Adjustments 165,162 76,677
----------- -----------
Net Cash Provided By
Operating Activities 236,243 87,583
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (2,362,478) (3,817,763)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Note Payable 0 1,301,000
Payment on Note Payable 0 (1,301,000)
Capital Contributions from Limited Members 5,963,109 5,677,256
Organization and Syndication Costs (877,402) (841,266)
Distributions Paid to Members (362,072) (47,721)
----------- -----------
Net Cash Provided By
Financing Activities 4,723,635 4,788,269
----------- -----------
NET INCREASE IN CASH 2,597,400 1,058,089
CASH, beginning of period 1,059,127 1,038
----------- -----------
CASH, end of period $ 3,656,527 $ 1,059,127
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid for Interest $ 0 $ 22,528
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 27 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2007 $ 1,038 $ 0 $ 1,038 0
Capital Contributions 0 5,677,256 5,677,256 567,725.6
Organization and
Syndication Costs 0 (841,266) (841,266)
Distributions Declared (3,547) (114,681) (118,228)
Net Income (Loss) (11,904) 22,810 10,906
-------- ----------- ----------- -----------
BALANCE, December 31, 2008 (14,413) 4,744,119 4,729,706 567,725.6
Capital Contributions 0 5,963,109 5,963,109 596,310.9
Organization and
Syndication Costs 0 (877,402) (877,402)
Distributions Declared (12,792) (413,593) (426,385)
Net Income 2,132 68,949 71,081
-------- ----------- ----------- -----------
BALANCE, December 31, 2009 $(25,073) $ 9,485,182 $ 9,460,109 1,164,036.5
======== =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(1) Organization -
AEI Income & Growth Fund 27 LLC ("Company"), a Limited
Liability Company, was formed on January 26, 2007 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
$10 per LLC Unit, payable on acceptance of the offer. The
Company commenced operations on June 5, 2008 when minimum
subscriptions of 150,000 LLC Units ($1,500,000) were
accepted. The offering terminated November 18, 2009, when
the extended offering period expired. The Company received
subscriptions for 1,164,036.5 Units. Under the terms of the
Operating Agreement, the Limited Members and Managing
Members contributed funds of $11,640,365 and $1,000,
respectively. The Company shall continue until liquidated
under the provisions of Article XII of the Operating
Agreement.
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
6.5% 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.
For tax purposes, the items of income, gain, loss and
deduction of the Company will be allocated among the Members
in a manner that will give economic effect to the
distributions made by the Company.
(2) Summary of Significant Accounting Policies -
Financial Statement Presentation
The accounts of the Company are maintained on the accrual
basis of accounting for both federal income tax purposes
and financial reporting purposes.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(2) Summary of Significant Accounting Policies - (Continued)
Accounting Estimates
Management uses estimates and assumptions in preparing
these financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions may affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.
Significant items, subject to such estimates and
assumptions, include the carrying value of investments in
real estate and real estate held for sale.
The Company regularly assesses whether market events and
conditions indicate that it is reasonably possible to
recover the carrying amounts of its investments in real
estate from future operations and sales. A change in
those market events and conditions could have a material
effect on the carrying amount of its real estate.
Cash Concentrations of Credit Risk
The Company's cash is deposited in one financial
institution and at times during the year it may exceed
FDIC insurance limits.
Receivables
Credit terms are extended to tenants in the normal course
of business. The Company performs ongoing credit
evaluations of its customers' financial condition and,
generally, requires no collateral.
Receivables are recorded at their estimated net
realizable value. The Company follows a policy of
providing an allowance for doubtful accounts; however,
based on historical experience, and its evaluation of the
current status of receivables, the Company is of the
belief that such accounts will be collectible in all
material respects and thus an allowance is not necessary.
Accounts are considered past due if payment is not made
on a timely basis in accordance with the Company's credit
terms. Receivables considered uncollectible are written
off.
Income Taxes
The income or loss of the Company for federal income tax
reporting purposes is includable in the income tax
returns of the Members. In general, no recognition has
been given to income taxes in the accompanying financial
statements.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(2) Summary of Significant Accounting Policies - (Continued)
The tax return and the amount of distributable Company
income or loss are subject to examination by federal and
state taxing authorities. If such an examination results
in changes to distributable Company income or loss, the
taxable income of the members would be adjusted
accordingly.
Revenue Recognition
The Company's real estate is leased under net leases,
classified as operating leases. The leases provide for
base annual rental payments payable in monthly
installments. The Company recognizes rental revenue
according to the terms of the individual leases. For
leases that contain stated rental increases, the
increases are recognized in the year in which they are
effective. Contingent rental payments are recognized
when the contingencies on which the payments are based
are satisfied and the rental payments become due under
the terms of the leases.
Investments in Real Estate
The Company purchases properties and records them at
cost. The Company compares the carrying amount of its
properties to the estimated probability-weighted future
undiscounted cash flows expected to result from the
property and its eventual disposition. If the sum of the
expected future cash flows is less than the carrying
amount of the property, the Company recognizes an
impairment loss by the amount by which the carrying
amount of the property exceeds the fair value of the
property.
Prior to January 1, 2009, the Company capitalized as
Investments in Real Estate certain costs incurred in the
review and acquisition of the properties. The costs were
allocated to the land, buildings and equipment. 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 buildings and equipment of the Company are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 25
years and 5 years, respectively.
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.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(2) Summary of Significant Accounting Policies - (Continued)
The Company accounts for properties owned as tenants-in-
common with affiliated entities and/or unrelated third
parties using the proportionate consolidation method.
Each tenant-in-common owns a separate, undivided interest
in the properties. Any tenant-in-common that holds more
than a 50% interest does not control decisions over the
other tenant-in-common interests. The financial
statements reflect only this Company's percentage share
of the properties' land, building and equipment,
liabilities, revenues and expenses.
The Company's properties are subject to environmental
laws and regulations adopted by various governmental
entities in the jurisdiction in which the properties are
located. These laws could require the Company to
investigate and remediate the effects of the release or
disposal of hazardous materials at these locations if
found. For each property, an environmental assessment is
completed prior to acquisition. In addition, the lease
agreements typically strictly prohibit the production,
handling, or storage of hazardous materials (except where
incidental to the tenant's business such as use of
cleaning supplies) in violation of applicable law to
restrict environmental and other damage. Environmental
liabilities are recorded when it is determined the
liability is probable and the costs can reasonably be
estimated. There were no environmental issues noted or
liabilities recorded at December 31, 2009 and 2008.
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 measured on a nonrecurring basis 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.
Recently Adopted Pronouncements
In December 2007, the Financial Accounting Standards
Board issued updated guidance, which applies to all
transactions or events in which an entity obtains control
of one or more businesses. This guidance (i) establishes
the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities
assumed, (ii) requires expensing of most transaction
costs, and (iii) requires the acquirer to disclose to
investors and other users all of the information needed
to evaluate and understand the nature and financial
effect of the business combination. These provisions
were adopted by the Company on January 1, 2009. The
primary impact of adopting this guidance on the Company's
financial statements was the requirement to expense
transaction costs relating to its acquisition activities
in 2009.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(2) Summary of Significant Accounting Policies - (Continued)
Recently Issued Accounting Pronouncements
Management has reviewed recently issued, but not yet
effective, accounting pronouncements and does not expect
the implementation of these pronouncements to have a
significant effect on the Company's financial statements.
(3) Related Party Transactions -
The Company owns the percentage interest shown below in the
following properties as tenants-in-common with the
affiliated entities listed: Best Buy store (33% - AEI
Income & Growth Fund XXII Limited Partnership and AEI Income
& Growth Fund 24 LLC); Staples store (30% - AEI Net Lease
Income & Growth Fund XX Limited Partnership); and Tractor
Supply Company store (37% - AEI Income & Growth Fund XXI
Limited Partnership).
AEI, AFM and AEI Securities, Inc. ("ASI") received the
following compensation and reimbursements for costs and
expenses from the Company for the years ended December 31:
2009 2008
a.AEI is reimbursed for costs incurred in providing services
related to managing the Company's operations and
properties, maintaining the Company's books, and
communicating with the Limited Partners. $ 89,435 $ 33,990
======== ========
b.AEI is reimbursed for all direct expenses it paid on the
Company's behalf to third parties related to Company
administration and property management. These
expenses included printing costs, legal and filing fees,
direct administrative costs, outside audit costs, taxes
insurance and other property costs. $ 14,053 $ 4,834
======== ========
c.AFM received an acquisition administration fee equal to
1.5% of the purchase price of acquisitions completed
using initial offering proceeds. $ 40,755 $ 49,383
======== ========
d.AEI is reimbursed for costs incurred in providing
services and direct expenses related to the acquisition
of properties on behalf of the Company. $ 48,645 $ 94,862
======== ========
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(3) Related Party Transactions - (Continued)
2009 2008
e.ASI was the underwriter of the Company's offering. ASI is
a wholly owned subsidiary of AEI Capital Corporation and a
member of the Financial Industry Regulatory Authority (FINRA).
ASI received, as underwriting commissions, 10% of proceeds
for sale of certain subscription Units (a majority of this
amount was re-allowed to other participating broker-dealers).
These costs were treated as a reduction of members' capital.
$ 579,247 $ 557,403
======== ========
f.AEI is reimbursed for costs incurred in providing services
related to managing the offering and organization
of the Company. $ 197,409 $ 147,249
======== ========
g.AEI is reimbursed for all direct expenses it paid on the
Company's behalf to third parties related to the offering
and organization of the Company. These expenses included
printing costs, legal and filing fees, direct administrative
costs, underwriting costs and due diligence fees. $ 100,746 $ 136,614
======== ========
The payable to AEI Fund Management, Inc. represents the
balance due for the services described in 3a, b, d, f and g.
This balance is non-interest bearing and unsecured and is to
be paid in the normal course of business.
(4) Investments in Real Estate -
The Company leases its properties to various tenants under
net leases, classified as operating leases. Under a net
lease, the tenant is responsible for real estate taxes,
insurance, maintenance, repairs and operating expenses for
the property. For some leases, the Company is responsible
for repairs to the structural components of the building,
the roof, and the parking lot. At the time the properties
were acquired, the remaining primary lease terms varied from
10 to 15 years. The leases provide the tenants with four
five-year renewal options subject to the same terms and
conditions as the primary term.
The Company's properties are commercial, single-tenant
buildings. The Starbucks store was constructed in 2007 and
acquired in 2008. The Best Buy store was constructed and
acquired in 2008. The Staples store was constructed in 2008
and acquired in 2009. The land for the Tractor Supply
Company store was acquired in 2008 and construction of the
store was completed in 2009. There have been no costs
capitalized as improvements subsequent to the acquisitions.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(4) Investments in Real Estate - (Continued)
The cost of the properties and related accumulated
depreciation at December 31, 2009 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Starbucks, Shreveport, LA $ 210,473 $1,158,659 $1,369,132 $ 86,899
Best Buy, Lake Geneva, WI 340,108 1,712,106 2,052,214 82,752
Staples, Vernon Hills, IL 378,000 1,213,987 1,591,987 30,350
Tractor Supply, Rapid City, SD 351,054 815,854 1,166,908 12,238
--------- ---------- ---------- --------
$1,279,635 $4,900,606 $6,180,241 $212,239
========= ========== ========== ========
On February 5, 2008, the Company purchased a Starbucks store
in Shreveport, Louisiana for $1,369,132 from an unrelated
third party. The property is leased to Starbucks Corporation
under a lease agreement with a remaining primary term of 10
years and initial annual rent of $93,000.
On October 6, 2008, the Company purchased a 33% interest in
a Best Buy store in Lake Geneva, Wisconsin for $2,052,214.
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 $144,325 for the interest
purchased.
On November 21, 2008, the Company purchased a 37% interest
in a parcel of land in Rapid City, South Dakota for
$338,446. The Company obtained title to the land in the
form of an undivided fee simple interest in the 37% interest
purchased. Simultaneous with the purchase of the land, the
Company entered into a Development Financing Agreement under
which the Company advanced funds to Brad and Dad, LLC for
the construction of a Tractor Supply Company store on the
site. The Company's share of the total acquisition costs,
including the cost of the land, was $1,166,908.
The property is leased to Tractor Supply Company under a
Lease Agreement with a primary term of 15 years and initial
annual rent of $83,250 for the interest purchased. Pursuant
to the Lease, the tenant commenced paying rent on August 6,
2009, the day the store opened for business. Pursuant to
the Development Financing Agreement, for the period from
November 21, 2008 to August 5, 2009, Brad and Dad, LLC paid
the Company interest at a rate of 6.9% on the purchase price
of the land and the amounts advanced for construction of the
building. Pursuant to the Lease, any improvements to the
land during the term of the Lease become the property of the
Company.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(4) Investments in Real Estate - (Continued)
On May 22, 2009, the Company purchased a 30% interest in a
Staples store in Vernon Hills, Illinois for $1,591,987. The
Company incurred $62,611 of acquisition expenses related to
the purchase. These costs were expensed as incurred as the
Company adopted new guidance on business combinations that
became effective January 1, 2009. The property is leased to
Staples the Office Superstore East, Inc. under a Lease
Agreement with a remaining primary term of 9.4 years and
initial annual rent of $132,135 for the interest purchased.
For properties owned as of December 31, 2009, the minimum
future rent payments required by the leases are as follows:
2010 $ 452,710
2011 452,710
2012 452,710
2013 460,460
2014 467,960
Thereafter 2,306,965
---------
$4,593,515
=========
There were no contingent rents recognized in 2009 and 2008.
(5) Note Payable -
In order to facilitate the purchase of its first property,
the Company entered into a Line of Credit Agreement with
Fidelity Bank, Edina, Minnesota, for $1,301,000. The Note
was due on August 1, 2008 and called for interest at the
prime rate minus 0.25% with the interest due on the first
day of each month. The Note was secured by all of the
Company's assets and was guaranteed by the Special Managing
Member and AEI Capital Corporation, the parent company of
the Managing Member. For the year ended December 31, 2008,
interest expense related to the Note was $22,528.
On June 5, 2008, the Company used the majority of the net
proceeds released from escrow to pay the outstanding
principal and interest due on the Note. Although the
registration statement indicates that no properties will be
acquired using debt financing, debt was used to acquire this
property solely to finance its purchase prior to the
admission of Limited Members. No property will be acquired
using debt financing after the initial admission of Limited
Members.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(6) Major Tenants -
The following schedule presents rent revenue from individual
tenants, or affiliated groups of tenants, who each
contributed more than ten percent of the Company's total
rent revenue for the years ended December 31:
Tenants Industry 2009 2008
Best Buy Stores, L.P. Retail $ 144,325 $ 34,141
Starbucks Corporation Retail 93,000 84,181
Staples the Office Superstore East, Inc. Retail 80,631 N/A
--------- ---------
Aggregate rent revenue of major tenants $ 317,956 $ 118,322
======== ========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 90% 100%
======== ========
(7) Members' Capital -
For the years ended December 31, 2009 and 2008, the Company
declared distributions of $426,385 and $118,228,
respectively. The Limited Members received distributions of
$413,593 and $114,681 and the Managing Members received
distributions of $12,792 and $3,547 for the years,
respectively. The Limited Members' distributions represent
$0.50 and $0.35 per LLC Unit outstanding using 827,187 and
330,872 weighted average Units in 2009 and 2008,
respectively. The distributions represent $0.08 and $0.07
per Unit of Net Income and $0.42 and $0.28 per Unit of
return of contributed capital in 2009 and 2008,
respectively.
Beginning in May 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.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
(8) Income Taxes -
The following is a reconciliation of net income for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
2009 2008
Net Income for Financial Reporting Purposes $ 71,081 $ 10,906
Depreciation for Tax Purposes Under
Depreciation for Financial Reporting Purposes 29,102 11,216
Acquisition Costs Expensed for Financial Reporting
Purposes, Capitalized for Tax Purposes 62,611 0
-------- --------
Taxable Income to Members $162,794 $ 22,122
======== ========
The following is a reconciliation of Members' Equity for
financial reporting purposes to Members' Equity reported for
federal income tax purposes for the years ended December 31:
2009 2008
Members'Equity for Financial Reporting Purposes $ 9,460,109 $4,729,706
Adjusted Tax Basis of Investments in Real Estate
Over Net Investments in Real Estate
for Financial Reporting Purposes 102,929 11,216
Syndication Costs Treated as Reduction of
Capital for Financial Reporting Purposes 1,701,637 838,833
---------- ---------
Members' Equity for Tax Reporting Purposes $11,264,675 $5,579,755
========== =========
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9AT.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) Internal Control Over Financial Reporting.
(i) Management's Report on Internal Control Over Financial
Reporting. The Managing Member, through its management, is
responsible for establishing and maintaining adequate internal
control over our financial reporting, as defined in Rule 13a-
15(f) under the Exchange Act, and for performing an assessment of
the effectiveness of our internal control over financial
reporting as of December 31, 2009. Internal control over
financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Our
system of internal control over financial reporting includes
those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management
of the Managing Member; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company's assets that
could have a material effect on the financial statements.
Management of the Managing Member performed an assessment
of the effectiveness of our internal control over financial
reporting as of December 31, 2009 based upon criteria in Internal
Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO").
Based on our assessment, management of the Managing Member
determined that our internal control over financial reporting was
effective as of December 31, 2009 based on the criteria in
Internal Control-Integrated Framework issued by the COSO.
ITEM 9AT.CONTROLS AND PROCEDURES. (Continued)
This annual report does not include an attestation report
of our registered public accounting firm regarding internal
control over financial reporting. Management's report was not
subject to attestation by our registered public accounting firm
pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in
this annual report.
(ii) 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.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The registrant is a limited liability company and has no
officers, directors, or direct employees. The Managing Members
manage and control the Company's affairs and have general
responsibility and the ultimate authority in all matters
affecting the Company's business. The Managing Members are AEI
Fund Management XXI, Inc. (AFM), the Managing Member, and Robert
P. Johnson, Chief Executive Officer, President and sole director
of AFM, the Special Managing Member. AFM is a wholly owned
subsidiary of AEI Capital Corporation of which Mr. Johnson is the
majority shareholder. AFM has only one senior financial
executive, its Chief Financial Officer. The Chief Financial
Officer reports directly to Mr. Johnson and is accountable for
his actions to Mr. Johnson. Although Mr. Johnson and AFM require
that all of their personnel, including the Chief Financial
Officer, engage in honest and ethical conduct, ensure full, fair,
accurate, timely, and understandable disclosure, comply with all
applicable governmental laws, rules and regulations, and report
to Mr. Johnson any deviation from these principles, because the
organization is composed of only approximately 35 individuals,
because the management of a company by an entity that has
different interests in distributions and income than investors
involves numerous conflicts of interest that must be resolved on
a daily basis, and because the ultimate decision maker in all
instances is Mr. Johnson, AFM has not adopted a formal code of
conduct. Instead, the materials pursuant to which investors
purchase Units disclose these conflicts of interest in detail and
Mr. Johnson, as the CEO and sole director of AFM, resolves
conflicts to the best of his ability, consistent with his
fiduciary obligations to AFM and the fiduciary obligations of AFM
to the Company. The director and officers of AFM are as follows:
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
(Continued)
Robert P. Johnson, age 65, is Chief Executive Officer,
President and sole director and has held these positions since
the formation of AFM in August 1994, and has been elected to
continue in these positions until December 2010. From 1970 to
the present, he has been employed exclusively in the investment
industry, specializing in limited partnership investments. In
that capacity, he has been involved in the development, analysis,
marketing and management of public and private investment
programs investing in net lease properties as well as public and
private investment programs investing in energy development.
Since 1971, Mr. Johnson has been the president, a director and a
registered principal of AEI Securities, Inc., which is registered
with the SEC as a securities broker-dealer, is a member of the
Financial Industry Regulatory Authority (FINRA) and is a member
of the Security Investors Protection Corporation (SIPC). Mr.
Johnson has been president, a director and the principal
shareholder of AEI Fund Management, Inc., a real estate
management company founded by him, since 1978. Mr. Johnson is
currently a general partner or principal of the general partner
in ten limited partnerships and a managing member in five LLCs.
Patrick W. Keene, age 50, is Chief Financial Officer,
Treasurer and Secretary and has held these positions since
January 22, 2003 and has been elected to continue in these
positions until December 2010. Mr. Keene has been employed by
AEI Fund Management, Inc. and affiliated entities since 1986.
Prior to being elected to the positions above, he was Controller
of the various entities. From 1982 to 1986, Mr. Keene was with
KPMG Peat Marwick Certified Public Accountants, first as an
auditor and later as a tax manager. Mr. Keene is responsible for
all accounting functions of AFM and the registrant.
Since Mr. Johnson serves as the Special Managing Member of
the Company, as well as the sole director of AFM, all of the
duties that might be assigned to an audit committee are assigned
to Mr. Johnson. Mr. Johnson is not an audit committee financial
expert, as defined. As an officer and majority owner, through a
parent company, of AFM, and as the Special Managing Member, Mr.
Johnson is not a "disinterested director" and may be subject to a
number of conflicts of interests in his capacity as sole director
of AFM.
Before the independent auditors are engaged, Mr. Johnson,
as the sole director of AFM, approves all audit-related fees, and
all permissible nonaudit fees, for services of our auditors.
Section 16(a) Beneficial Ownership Reporting Compliance
Under federal securities laws, the directors and officers
of the Managing Member of the Company, and any beneficial owner
of more than 10% of a class of equity securities of the Company,
are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities
and Exchange Commission (the "Commission"). Specific due dates
for these reports have been established by the Commission, and
the Company is required to disclose in this Annual Report on 10-K
any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 2009.
Based upon information provided by officers and directors of the
Managing Member, all officers, directors and 10% owners filed all
reports on a timely basis in the 2009 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION.
The Managing Member and affiliates are reimbursed at cost
for all services performed on behalf of the registrant and for
all third party expenses paid on behalf of the registrant. The
cost for services performed on behalf of the registrant will be
actual time spent performing such services plus an overhead
burden. These services include organizing the registrant and
arranging for the offer and sale of Units, reviewing properties
for acquisition and rendering administrative, property management
and property sales services. The amount and nature of such
payments are detailed in Item 13 of this annual report on Form 10-
K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information pertaining to
the ownership of the Units by each person known by the Company to
beneficially own 5% or more of the Units, by each Managing
Member, and by each officer or director of the Managing Member as
of February 28, 2010:
Name and Address Number of Percent
of Beneficial Owner Units Held of Class
AEI Fund Management XXI, Inc. 0 0%
Robert P. Johnson 0 0%
Patrick W. Keene 0 0%
Address for all:
1300 Wells Fargo Place
30 East 7th Street, St. Paul, Minnesota 55101
The Managing Members know of no holders of more than 5% of the
outstanding Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.
The registrant, AFM and its affiliates have common
management and utilize the same facilities. As a result, certain
administrative expenses are allocated among these related
entities. All of such activities and any other transactions
involving the affiliates of the Managing Member of the registrant
are governed by, and are conducted in conformity with, the
limitations set forth in the Operating Agreement of the
registrant. Reference is made to Note 3 of the Financial
Statements, as presented, and is incorporated herein by
reference, for details of related party transactions for the
years ended December 31, 2009 and 2008.
Neither the registrant, nor the Managing Member of the
registrant, has a board of directors consisting of any members
who are "independent." The sole director of the Managing Member,
Robert P. Johnson, is also the Special Managing Member of the
registrant, and is the Chief Executive Officer, and indirectly
the principal owner, of the Managing Member. Accordingly, there
is no disinterested board, or other functioning body, that
reviews related party transactions, or the transactions between
the registrant and the Managing Members, except as performed in
connection with the audit of its financial statements.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE. (Continued)
The limitations included in the Operating Agreement
require that the cumulative reimbursements to the Managing
Members and their affiliates for certain expenses will not exceed
an amount equal to the sum of (i) 20% of capital contributions,
(ii) 1% of gross revenues, plus an initial leasing fee of 3% of
gross revenues for the first five years of the original term of
each lease, (iii) 3% of Net Proceeds of Sale, and (iv) 10% of Net
Cash Flow less the Net Cash Flow actually distributed to the
Managing Members. The cumulative reimbursements subject to this
limitation are reimbursements for (i) organization and offering
expenses, including commissions, (ii) acquisition expenses paid
with proceeds from the initial offering of Units, (iii) services
provided in the sales effort of properties, and (iv) expenses of
controlling persons and overhead expenses directly attributable
to the forgoing services or attributable to administrative
services. As of December 31, 2009, these cumulative
reimbursements to the Managing Members and their affiliates did
not exceed the limitation amount.
The following table sets forth the forms of compensation,
distributions and cost reimbursements paid by the registrant to
the Managing Members or their Affiliates in connection with the
operation of the Fund and its properties for the period from
inception through December 31, 2009.
Person or Entity Amount Incurred From
Receiving Form and Method Inception (January 26, 2007)
Compensation of Compensation To December 31, 2009
AEI Securities, Inc. Selling Commissions equal to 10% of $1,136,650
proceeds, excluding proceeds from
distribution reinvestments,
most of which were reallowed to
Participating Dealers.
Managing Members Reimbursement at Cost for other $ 582,018
and Affiliates Organization and Offering Costs.
Managing Members Acquisition Administration Fees equal $ 90,138
to 1.5% of the purchase price of
acquisitions completed using initial
offering proceeds.
Managing Members Reimbursement at Cost for all $ 143,507
and Affiliates Acquisition Expenses.
Managing Members Reimbursement at Cost for providing $ 123,425
Affiliates administrative services to the Fund,
including all expenses related to
management of the Fund's properties
and all other transfer agency,
reporting, partner relations and
other administrative functions.
Managing Members Reimbursement at Cost for providing $ 0
and Affiliates services related to the disposition
of the Fund's properties.
Managing Members 3% of Net Cash Flow in any fiscal year.$ 16,339
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE. (Continued)
Person or Entity Amount Incurred From
Receiving Form and Method Inception (January 26, 2007)
Compensation of Compensation To December 31, 2009
Managing Members 1% of distributions of Net Proceeds $ 0
of Sale until Limited Members have
received an amount equal to (a) their
Adjusted Capital Contributions, plus
(b) an amount equal to 6.5% of their
Adjusted Capital Contributions per
annum, cumulative but not compounded,
to the extent not previously
distributed. 10% of distributions of
Net Proceeds of Sale thereafter.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a summary of the fees billed to the
Company by Boulay, Heutmaker, Zibell & Co. P.L.L.P. for
professional services rendered for the years ended December 31,
2009 and 2008:
Fee Category 2009 2008
Audit Fees $ 16,628 $ 13,291
Audit-Related Fees 0 0
Tax Fees 0 0
All Other Fees 0 0
--------- --------
Total Fees $ 16,628 $ 13,291
========= ========
Audit Fees - Consists of fees billed for professional services
rendered for the audit of the Company's annual financial
statements and review of the interim financial statements
included in quarterly reports, and services that are normally
provided by Boulay, Heutmaker, Zibell & Co. P.L.L.P. in
connection with statutory and regulatory filings or engagements.
Audit-Related Fees - Consists of fees billed for assurance and
related services that are reasonably related to the performance
of the audit or review of financial statements and are not
reported under "Audit Fees." These services include consultations
concerning financial accounting and reporting standards.
Tax Fees - Consists of fees billed for professional services for
federal and state tax compliance, tax advice and tax planning.
All Other Fees - Consists of fees for products and services other
than the services reported above.
Policy for Preapproval of Audit and Permissible Non-Audit
Services of Independent Auditors
Before the Independent Auditors are engaged by the Company
to render audit or non-audit services, the engagement is approved
by Mr. Johnson acting as the Company's audit committee.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) (1) A list of the financial statements contained
herein is set forth on page 12.
(a) (2) Schedules are omitted because of the absence of
conditions under which they are required or because
the required information is presented in the
financial statements or related notes.
(a) (3) The Exhibits filed in response to Item 601 of
Regulation S-K are listed below.
3.1 Certificate of Limited Liability Company (incorporated
by reference to Exhibit 3.1 of the registrant's Registration
Statement on Form SB-2 filed on July 30, 2007 [File No. 333-
144961]).
3.2 Operating Agreement to the Prospectus (incorporated by
reference to Exhibit A of the registrant's Registration
Statement on Form SB-2 filed on October 23, 2007 [File No.
333-144961]).
10.1 Form of Impoundment Agreement with Fidelity Bank
(incorporated by reference to Exhibit 10 of the registrant's
Registration Statement on Form SB-2 filed on July 30, 2007
[File No. 333-144961]).
10.2 Assignment of Purchase Agreement between the Company
and AEI Fund Management, Inc. relating to the Property at
319 Bert Kouns Industrial Loop, Shreveport, Louisiana
(incorporated by reference to Exhibit 10.1 of Form 8-K filed
February 12, 2008).
10.3 Assignment and Assumption of Lease dated February 4,
2008 between the Company and Colgate Bert Kouns, L.L.C.
relating to the Property at 319 Bert Kouns Industrial Loop,
Shreveport, Louisiana (incorporated by reference to Exhibit
10.2 of Form 8-K filed February 12, 2008).
10.4 Assignment and Assumption of Purchase and Sale
Agreement dated September 24, 2008 between the Company, AEI
Income & Growth Fund XXII Limited Partnership, AEI Income &
Growth Fund 24 LLC and AEI Fund Management, Inc. relating to
the Property at 700 North Edwards Boulevard, Lake Geneva,
Wisconsin (incorporated by reference to Exhibit 10.1 of Form
8-K filed October 10, 2008).
10.5 Assignment and Assumption of Lease dated October 6,
2008 between the Company, AEI Income & Growth Fund XXII
Limited Partnership, AEI Income & Growth Fund 24 LLC and
Ryan Companies US, Inc. relating to the Property at 700
North Edwards Boulevard, Lake Geneva, Wisconsin
(incorporated by reference to Exhibit 10.2 of Form 8-K filed
October 10, 2008).
10.6 Assignment and Assumption of Purchase and Sale
Agreement dated May 6, 2009 between the Company, AEI Net
Lease Income & Growth Fund XX Limited Partnership and AEI
Fund Management, Inc. relating to the Property at 1600 North
Milwaukee Avenue, Vernon Hills, Illinois (incorporated by
reference to Exhibit 10.1 of Form 8-K filed May 29, 2009).
10.7 Assignment and Assumption of Lease dated May 22, 2009
between the Company, AEI Net Lease Income & Growth Fund XX
Limited Partnership and Bradford Landing South LLC relating
to the Property at 1600 North Milwaukee Avenue, Vernon
Hills, Illinois (incorporated by reference to Exhibit 10.2
of Form 8-K filed May 29, 2009).
10.8 Assignment and Assumption of Lease dated November 21,
2008 between the Company, AEI Income & Growth Fund XXI
Limited Partnership and Brad and Dad LLC relating to the
Property at 3430 East Mall Drive, Rapid City, South Dakota
(incorporated by reference to Exhibit 10.1 of Form 10-Q
filed November 12, 2009).
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (Continued)
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 Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AEI INCOME & GROWTH FUND 27
Limited Liability Company
By: AEI Fund Management XXI, Inc.
Its Managing Member
March 29, 2010 By:/s/ ROBERT P JOHNSON
Robert P. Johnson, President
and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ROBERT P JOHNSON President (Principal Executive Officer) March 29, 2010
Robert P. Johnson and Sole Director of Managing Member
/s/PATRICK W KEENE Chief Financial Officer and Treasurer March 29, 2010
Patrick W. Keene (Principal Accounting Officer