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, 2010
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)
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 27 LLC
INDEX
Part I - Financial Information
Item 1. Financial Statements (unaudited):
Balance Sheet as of September 30, 2010 and December 31, 2009
Statements for the Periods ended September 30, 2010 and 2009:
Operations
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 5. Other Information
Item 6. Exhibits
Signatures
AEI INCOME & GROWTH FUND 27 LLC
BALANCE SHEET
SEPTEMBER 30, 2010 AND DECEMBER 31, 2009
ASSETS
2010 2009
CURRENT ASSETS:
Cash $ 1,901,342 $ 3,656,527
INVESTMENTS IN REAL ESTATE:
Land 1,555,635 1,279,635
Buildings and Equipment 6,221,307 4,900,606
Accumulated Depreciation (370,263) (212,239)
----------- -----------
Net Investments in Real Estate 7,406,679 5,968,002
----------- -----------
Total Assets $ 9,308,021 $ 9,624,529
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 25,391 $ 29,600
Distributions Payable 146,974 134,820
Unearned Rent 49,109 0
----------- -----------
Total Current Liabilities 221,474 164,420
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members (33,340) (25,073)
Limited Members, $10 per Unit;
10,000,000 Units authorized;
1,164,037 Units issued and outstanding 9,119,887 9,485,182
----------- -----------
Total Members' Equity 9,086,547 9,460,109
----------- -----------
Total Liabilities and Members' Equity $ 9,308,021 $ 9,624,529
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 27 LLC
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30
Three Months Ended Nine Months Ended
9/30/10 9/30/09 9/30/10 9/30/09
RENTAL INCOME $ 139,227 $ 105,121 $ 365,582 $ 238,347
EXPENSES:
LLC Administration -
Affiliates 30,297 21,241 86,634 57,983
LLC Administration
and Property Management -
Unrelated Parties 4,082 2,627 18,572 11,630
Property Acquisition 52,129 1,735 52,129 58,773
Depreciation 60,012 45,172 158,024 107,751
---------- ---------- ---------- ----------
Total Expenses 146,520 70,775 315,359 236,137
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) (7,293) 34,346 50,223 2,210
OTHER INCOME:
Interest Income 5,606 9,380 23,199 35,351
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (1,687) $ 43,726 $ 73,422 $ 37,561
========== ========== ========== ==========
NET INCOME (LOSS) ALLOCATED:
Managing Members $ (50) $ 1,312 $ 2,203 $ 1,127
Limited Members (1,637) 42,414 71,219 36,434
---------- ---------- ---------- ----------
$ (1,687) $ 43,726 $ 73,422 $ 37,561
========== ========== ========== ==========
NET INCOME (LOSS)
PER LLC UNIT $ .00 $ .05 $ .06 $ .05
========== ========== ========== ==========
Weighted Average Units Outstanding -
Basic and Diluted 1,164,037 901,661 1,164,037 754,179
========== ========== ========== ==========
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 NINE MONTHS ENDED SEPTEMBER 30
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 73,422 $ 37,561
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 158,024 107,751
Decrease in Receivables 0 2,955
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (4,209) 12,259
Increase in Unearned Rent 49,109 30,788
----------- -----------
Total Adjustments 202,924 153,753
----------- -----------
Net Cash Provided By
Operating Activities 276,346 191,314
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,596,701) (2,313,496)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Members 0 3,948,089
Organization and Syndication Costs 0 (575,149)
Distributions Paid to Members (434,830) (245,877)
----------- -----------
Net Cash Provided By (Used For)
Financing Activities (434,830) 3,127,063
----------- -----------
NET INCREASE (DECREASE) IN CASH (1,755,185) 1,004,881
CASH, beginning of period 3,656,527 1,059,127
----------- -----------
CASH, end of period $ 1,901,342 $ 2,064,008
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Capitalized Construction Costs
Payable at Period End $ 0 $ 45,360
=========== ===========
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 NINE MONTHS ENDED SEPTEMBER 30
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2008 $(14,413) $ 4,744,119 $ 4,729,706 567,725.6
Capital Contributions 0 3,948,089 3,948,089 394,808.9
Organization and
Syndication Costs 0 (575,149) (575,149)
Distributions Declared (8,747) (282,817) (291,564)
Net Income 1,127 36,434 37,561
-------- ----------- ----------- ------------
BALANCE, September 30, 2009 $(22,033) $ 7,870,676 $ 7,848,643 962,534.5
======== =========== =========== ============
BALANCE, December 31, 2009 $(25,073) $ 9,485,182 $ 9,460,109 1,164,036.5
Distributions Declared (10,470) (436,514) (446,984)
Net Income 2,203 71,219 73,422
-------- ----------- ----------- ------------
BALANCE, September 30, 2010 $(33,340) $ 9,119,887 $ 9,086,547 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
SEPTEMBER 30, 2010
(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 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.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
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.
(3) Investments in Real Estate -
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
remaining interest in the property was purchased by AEI
Income & Growth Fund XXI Limited Partnership, an affiliate
of the Company.
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.
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.
The remaining interest in the property was purchased by AEI
Net Lease Income & Growth Fund XX Limited Partnership, an
affiliate of the Company.
On July 23, 2010, the Company purchased a 69% interest in a
Fresenius Medical Center in Hiram, Georgia for $1,596,701.
The Company incurred $52,129 of acquisition expenses related
to the purchase that were expensed. The property is leased
to Fresenius Medical Care-Paulding Dialysis Partners, LLC, a
subsidiary of Fresenius Medical Care Holdings, Inc., under a
Lease Agreement with a remaining primary term of 11.8 years
and initial annual rent of $136,595 for the interest
purchased. The remaining interest in the property was
purchased by AEI Income & Growth Fund 24 LLC, an affiliate
of the Company.
AEI INCOME & GROWTH FUND 27 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(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.
(5) Fair Value Measurements -
As of September 30, 2010, the Company has no assets or
liabilities measured at fair value on a recurring basis or
nonrecurring basis.
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 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.
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, 2010, the Company
recognized rental income of $365,582, representing nine months
rent from four properties and rent from one property acquired
during the period. At September 30, 2010, the scheduled annual
rent for the properties was $589,305. For the nine months ended
September 30, 2009, the Company recognized rental income of
$238,347, representing nine months rent from two properties and
rent from two properties acquired during the period.
For the nine months ended September 30, 2010 and 2009, the
Company incurred LLC administration expenses from affiliated
parties of $86,634 and $57,983, 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 $18,572
and $11,630, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
For the nine months ended September 30, 2010 and 2009, the
Company incurred property acquisition expenses of $52,129 and
$58,773, respectively. 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 nine months ended September 30, 2010 and 2009, the
Company recognized interest income of $23,199 and $35,351,
respectively. In 2010, interest income earned on its money
market account increased as the Company had more subscription
proceeds temporarily invested in the account in 2010. However,
overall interest income decreased as the Company received $23,603
of interest income on construction advances in 2009.
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 $276,346 of cash from operations
during the nine months ended September 30, 2010, representing net
income of $73,422, a non-cash expense of $158,024 for
depreciation and $44,900 in net timing differences in the
collection of payments from the tenants and the payment of
expenses. The Company generated $191,314 of cash from operations
during the nine months ended September 30, 2009, representing net
income of $37,561, a non-cash expense of $107,751 for
depreciation and $46,002 in net timing differences in the
collection of payments from the tenants and the payment of
expenses. During the nine months ended September 30, 2010 and
2009, cash from operations was reduced by $52,129 and $58,773,
respectively, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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, 2010, the Company expended $1,596,701 to invest in
real properties. On July 23, 2010, the Company purchased a 69%
interest in a Fresenius Medical Center in Hiram, Georgia. 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 nine months
ended September 30, 2009, the Company's real estate expenditures
were $2,313,496.
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 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, 2010 and 2009, the
Company declared distributions of $446,984 and $291,564,
respectively. The Limited Members received distributions of
$436,514 and $282,817 and the Managing Members received
distributions of $10,470 and $8,747 for the periods,
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 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. At
September 30, 2010, 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The Economy and Market Conditions
The impact of conditions in the current economy, including
the turmoil in the credit markets, has adversely affected many
real estate investment funds. However, the absence of mortgage
financing on the Company's properties eliminates the risks of
foreclosure and debt-refinancing that can negatively impact the
value and distributions of leveraged real estate investment
funds. Nevertheless, a prolonged economic downturn may adversely
affect the operations of the Company's tenants and their cash
flows. If a tenant were to default on its lease obligations, the
Company's income would decrease, its distributions would likely
be reduced and the value of its properties might decline.
The Company's plan is 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. During 2008, 2009 and
2010 the Company did not complete any property sales. Until such
time as economic conditions allow the Company to begin selling
properties at attractive prices, quarterly distributions will
reflect the distribution of net core rental income and capital
reserves, if any. Distribution rates in 2010 are expected to be
consistent with distribution rates in 2009.
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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
(a) None.
(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") was 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
$7,891,682 to acquire real estate of which $7,605,908 represented
cash paid to unaffiliated sellers of real estate, $114,089
represented an acquisition administration fee paid to the
Managing Member and $171,685 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) 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.
PART II - OTHER INFORMATION
(Continued)
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Units tendered to the Company during January and July are
redeemed on April 1st and October 1st, respectively, of each year
subject to the following limitations. The Company will not be
obligated to purchase in any year more than 2% of the total
number of Units outstanding on January 1 of such year. In no
event shall the Company be obligated to purchase Units if, in the
sole discretion of the Managing Member, such purchase would
impair the capital or operation of the Company. During the
period covered by this report, the Company did not purchase any
Units.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
31.1 Certification of Chief Executive Officer of Managing
Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer of Managing
Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief
Financial Officer of Managing Member pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
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, 2010 AEI Income & Growth Fund 27 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
