Real Estate Held for Investment

9 Months Ended

Sep. 30, 2012

Real Estate Disclosure [Text Block]

(4) Real Estate Held for Investment –

On February 23, 2012, the Partnership purchased a 47% interest in a Tractor Supply Company store in Starkville, Mississippi for $1,339,500. The Partnership allocated $228,586 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles, and allocated $82,065 to Acquired Below-Market Lease Intangibles.  The Partnership incurred $23,079 of acquisition expenses related to the purchase that were expensed. The property is leased to Tractor Supply Company under a Lease Agreement with a remaining primary term of 15 years (as of the date of purchase) and annual rent of $102,462 for the interest purchased. The remaining interest in the property was purchased by AEI Income & Growth Fund 26 LLC, an affiliate of the Partnership.

On July 23, 2012, the Partnership purchased a Family Dollar store in Mobile, Alabama for $1,410,900. The Partnership allocated $475,411 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles of $190,845 and above-market lease intangibles of $284,566. The Partnership incurred $28,263 of acquisition expenses related to the purchase that were expensed. The property is leased to Family Dollar Stores of Alabama, Inc., a subsidiary of Family Dollar Stores, Inc., under a Lease Agreement with a remaining primary term of 9.9 years and annual rent of $119,926.

For the nine months ended September 30, 2012 and 2011, the value of in-place lease intangibles amortized to expense was $12,147 and $0, respectively, the decrease to rental income for abovemarket leases was $4,783 and $0, respectively, and the increase to rental income for below-market leases was $3,209 and $0, respectively. For lease intangibles owned as of September 30, 2012, the weighted average remaining life is 130 months, the estimated amortization expense for in-place lease intangibles is $34,569, the estimated increase to rental income for above-market leases is $28,696 and the estimated increase to rental income for below-market leases is $5,502 for each of the next five succeeding years.

On January 31, 2011, the Lease term expired for the HomeTown Buffet restaurant in Albuquerque, New Mexico. The tenant returned possession of the property to the Partnership. The Partnership has listed the property for lease or sale with a real estate broker in the Albuquerque area. While the property is vacant, the Partnership is responsible for its 40.1354% share of real estate taxes and other costs associated with maintaining the property.

Effective June 20, 2011, the Partnership entered into an agreement to lease the former Red Robin property to a local restaurant operator. The Lease Agreement had a term of two years with annual rental payments of $100,000. The tenant remodeled the building and converted it into a Chinese buffet restaurant called Royal Buffet. In July 2012, the tenant closed the restaurant due to lower than expected sales. The Partnership took possession of the property and has listed the property for lease or sale with a real estate broker in the Colorado Springs area. While the property is vacant, the Partnership is responsible for real estate taxes and other costs associated with maintaining the property.

The HomeTown Buffet and Royal Buffet restaurants represent less than 6% of the value of the Partnership's property portfolio. The Partnership has evaluated the carrying value of the properties and concluded that there is no impairment at this time.