10-Q 1 q272-10.txt 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: June 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: Balance Sheet as of June 30, 2010 and December 31, 2009 Statements for the Periods ended June 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 JUNE 30, 2010 AND DECEMBER 31, 2009 ASSETS 2010 2009 CURRENT ASSETS: Cash $ 3,574,162 $ 3,656,527 INVESTMENTS IN REAL ESTATE: Land 1,279,635 1,279,635 Buildings and Equipment 4,900,606 4,900,606 Accumulated Depreciation (310,251) (212,239) ----------- ----------- Net Investments in Real Estate 5,869,990 5,968,002 ----------- ----------- Total Assets $ 9,444,152 $ 9,624,529 =========== =========== LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 21,212 $ 29,600 Distributions Payable 150,005 134,820 Unearned Rent 37,726 0 ----------- ----------- Total Current Liabilities 208,943 164,420 ----------- ----------- MEMBERS' EQUITY (DEFICIT): Managing Members (31,820) (25,073) Limited Members, $10 per Unit; 10,000,000 Units authorized; 1,164,037 Units issued and outstanding 9,267,029 9,485,182 ----------- ----------- Total Members' Equity 9,235,209 9,460,109 ----------- ----------- Total Liabilities and Members' Equity $ 9,444,152 $ 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 JUNE 30 Three Months Ended Six Months Ended 6/30/10 6/30/09 6/30/10 6/30/09 RENTAL INCOME $ 113,178 $ 73,895 $ 226,355 $ 133,226 EXPENSES: LLC Administration - Affiliates 27,713 17,755 56,337 36,742 LLC Administration and Property Management - Unrelated Parties 6,397 3,253 14,490 9,003 Property Acquisition 0 57,038 0 57,038 Depreciation 49,006 34,777 98,012 62,579 ---------- ---------- ---------- ---------- Total Expenses 83,116 112,823 168,839 165,362 ---------- ---------- ---------- ---------- OPERATING INCOME (LOSS) 30,062 (38,928) 57,516 (32,136) OTHER INCOME: Interest Income 8,742 14,616 17,593 25,971 ---------- ---------- ---------- ---------- NET INCOME (LOSS) $ 38,804 $ (24,312) $ 75,109 $ (6,165) ========== ========== ========== ========== NET INCOME (LOSS) ALLOCATED: Managing Members $ 1,164 $ (729) $ 2,253 $ (185) Limited Members 37,640 (23,583) 72,856 (5,980) ---------- ---------- ---------- ---------- $ 38,804 $ (24,312) $ 75,109 $ (6,165) ========== ========== ========== ========== NET INCOME (LOSS) PER LLC UNIT $ .03 $ (.03) $ .06 $ (.01) ========== ========== ========== ========== Weighted Average Units Outstanding - Basic and Diluted 1,164,037 744,188 1,164,037 680,438 ========== ========== ========== ========== 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 SIX MONTHS ENDED JUNE 30 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ 75,109 $ (6,165) Adjustments To Reconcile Net Income (Loss) To Net Cash Provided By Operating Activities: Depreciation 98,012 62,579 Increase in Receivables 0 (969) Increase (Decrease) in Payable to AEI Fund Management, Inc. (8,388) 4,258 Increase in Unearned Rent 37,726 18,761 ----------- ----------- Total Adjustments 127,350 84,629 ----------- ----------- Net Cash Provided By Operating Activities 202,459 78,464 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in Real Estate 0 (1,905,526) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contributions from Limited Members 0 2,986,191 Organization and Syndication Costs 0 (437,480) Distributions Paid to Members (284,824) (149,977) ----------- ----------- Net Cash Provided By (Used For) Financing Activities (284,824) 2,398,734 ----------- ----------- NET INCREASE (DECREASE) IN CASH (82,365) 571,672 CASH, beginning of period 3,656,527 1,059,127 ----------- ----------- CASH, end of period $ 3,574,162 $ 1,630,799 =========== =========== 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 SIX MONTHS ENDED JUNE 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 2,986,191 2,986,191 298,619.1 Organization and Syndication Costs 0 (437,480) (437,480) Distributions Declared (5,261) (170,110) (175,371) Net Loss (185) (5,980) (6,165) --------- ---------- ---------- ----------- BALANCE, June 30, 2009 $ (19,859) $7,116,740 $7,096,881 866,344.7 ========= ========== ========== =========== BALANCE, December 31, 2009 $ (25,073) $9,485,182 $9,460,109 1,164,036.5 Distributions Declared (9,000) (291,009) (300,009) Net Income 2,253 72,856 75,109 --------- ---------- ---------- ----------- BALANCE, June 30, 2010 $ (31,820) $9,267,029 $9,235,209 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 JUNE 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 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 June 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 six months ended June 30, 2010, the Company recognized rental income of $226,355, representing six months rent from four properties. For the six months ended June 30, 2009, the Company recognized rental income of $133,226, representing six months rent from two properties and rent from one property acquired during the period. For the six months ended June 30, 2010 and 2009, the Company incurred LLC administration expenses from affiliated parties of $56,337 and $36,742, 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 $14,490 and $9,003, 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 six months ended June 30, 2009, the Company incurred property acquisition expenses of $57,038. 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 six months ended June 30, 2010 and 2009, the Company recognized interest income of $17,593 and $25,971, 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 $18,367 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 $202,459 of cash from operations during the six months ended June 30, 2010, representing net income of $75,109, a non-cash expense of $98,012 for depreciation and $29,338 in net timing differences in the collection of payments from the tenants and the payment of expenses. The Company generated $78,464 of cash from operations during the six months ended June 30, 2009, representing a net loss of $6,165, a non-cash expense of $62,579 for depreciation and $22,050 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 $57,038 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 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 six months ended June 30, 2010, the Company did not purchase any real properties. 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 six months ended June 30, 2009, the Company's real estate expenditures were $1,905,526. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) 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 six months ended June 30, 2010 and 2009, the Company declared distributions of $300,009 and $175,371, respectively, which were allocated 97% to the Limited Members and 3% to the Managing Members. 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 June 30, 2010, the Company had entered into one formal contractual commitment to expend capital. On July 23, 2010, the Company purchased a 69% interest in a Fresenius Medical Center in Hiram, Georgia for $1,596,701. 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. The Economy and Market Conditions The impact of conditions in the current economy, including the turmoil in the credit markets, has adversely affected many real estate investment funds. However, the absence of mortgage financing on the Company's properties eliminates the risks of foreclosure and debt-refinancing that can negatively impact the value and distributions of leveraged real estate investment funds. Nevertheless, a prolonged economic downturn may adversely affect the operations of the Company's tenants and their cash flows. If a tenant were to default on its lease obligations, the Company's income would decrease, its distributions would likely be reduced and the value of its properties might decline. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) 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. PART II - OTHER INFORMATION (Continued) 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 $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) 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. 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. PART II - OTHER INFORMATION (Continued) 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: August 11, 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)