AEI Income & Growth Fund XXI Ltd Partnership Files 2023 Annual Report

TL;DR

<b>AEI Income & Growth Fund XXI Limited Partnership filed its 2023 annual report on Form 10-K, indicating its status as a non-accelerated and smaller reporting company.</b>

AI Summary

AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP (XXAAU) filed a Annual Report (10-K) with the SEC on March 22, 2024. AEI Income & Growth Fund XXI Limited Partnership filed its annual report on Form 10-K for the fiscal year ended December 31, 2023. The company is registered in Minnesota and its principal executive offices are located at 30 East 7th Street, Suite 1300, St. Paul, MN 55101. The registrant is not a well-known seasoned issuer, an accelerated filer, or a large accelerated filer. It is classified as a non-accelerated filer and a smaller reporting company. The partnership has submitted all required reports for the preceding 12 months and has been subject to such filing requirements for the past 90 days.

Why It Matters

For investors and stakeholders tracking AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP, this filing contains several important signals. This filing provides a comprehensive overview of the company's financial performance and operational status for the fiscal year 2023. Understanding the company's filer status (non-accelerated, smaller reporting company) is crucial for assessing the level of detail and regulatory scrutiny applied to its disclosures.

Risk Assessment

Risk Level: low — AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP shows low risk based on this filing. The company is a non-accelerated filer and smaller reporting company, indicating a lower level of regulatory scrutiny and disclosure requirements compared to larger entities.

Analyst Insight

Monitor future filings for any changes in filer status or financial disclosures that might indicate growth or increased complexity.

Key Numbers

• 2023 — Fiscal Year End (Annual Report for the fiscal year ended December 31, 2023)
• 0000931755-24-000003 — Accession Number (Unique identifier for the filing)
• 000-29274 — Commission File Number (SEC file number for the registrant)
• 41-1789725 — IRS Employer Identification No. (Tax identification number)

Key Players & Entities

• AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP (company) — Filer name
• 2023 (date) — Fiscal year end
• December 31 (date) — Fiscal year end
• 30 East 7th Street, Suite 1300 (address) — Principal executive offices
• St. Paul (location) — City of principal executive offices
• MN (location) — State of principal executive offices
• 55101 (postal_code) — ZIP code of principal executive offices
• 6512277333 (phone_number) — Business phone number

FAQ

Industry Context

The company operates in the Real Estate sector, specifically within Real Estate Investment Trusts or similar structures, as indicated by its SIC code.

Regulatory Implications

The filing is made under the Securities Exchange Act of 1934, requiring regular reporting for public companies.

What Investors Should Do

1. Review the full 10-K filing for detailed financial statements and management discussion.
2. Track the company's performance against its peers in the real estate sector.
3. Monitor for any future filings or press releases that may provide updates on operations or financial health.

Key Dates

• 2024-03-22: Filing Date — Filing of the 2023 Form 10-K
• 2023-12-31: Fiscal Year End — Period covered by the annual report

Year-Over-Year Comparison

This is the annual report for the fiscal year ended December 31, 2023. No prior filing data is available in this extract for comparison.

Key Financial Figures

• $17,076,710 — e is no ready market for such Units) of $17,076,710. DOCUMENTS INCORPORATED BY REFERENCE
• $24,000,000 — The Partnership offered for sale up to $24,000,000 of limited partnership interests (the "
• $1,000 — nterests (the "Units") (24,000 Units at $1,000 per Unit) pursuant to a registration st
• $1,500,000 — ons of 1,500 Limited Partnership Units ($1,500,000) were accepted. On January 31, 1997, th
• $19,686,525 — in seven properties, at a total cost of $19,686,525. The balance of the subscription procee
• $11,088,747 — in five properties with a total cost of $11,088,747. During the years ended December 31, 20
• $2,477,214 — rests and received net sale proceeds of $2,477,214, and $2,450,634 which resulted in net g
• $2,450,634 — ed net sale proceeds of $2,477,214, and $2,450,634 which resulted in net gains of $13,198,
• $13,198 — ,450,634 which resulted in net gains of $13,198, and $1,268,078, respectively. During 2
• $1,268,078 — h resulted in net gains of $13,198, and $1,268,078, respectively. During 2021, the Partner
• $1,805,735 — . During 2021, the Partnership expended $1,805,735 to purchase one additional property int
• $5,338,093 — . During 2022, the Partnership expended $5,338,093 to purchase two additional property int
• $14,057,497 — in five properties with a total cost of $14,057,497. Major Tenants During 2023, five te
• $6,929 — urities Act of 1933. Distributions of $6,929 and $6,904 were declared to the General
• $6,904 — of 1933. Distributions of $6,929 and $6,904 were declared to the General Partners a

Filing Documents

• aei21-20231231.htm (10-K) — 515KB
• ex2131-1.htm (EX-31.1) — 7KB
• ex2131-2.htm (EX-31.2) — 8KB
• ex2132.htm (EX-32) — 8KB
• 0000931755-24-000003.txt (&nbsp;) — 2798KB
• aei21-20231231.xsd (EX-101.SCH) — 35KB
• aei21-20231231_def.xml (EX-101.DEF) — 127KB
• aei21-20231231_lab.xml (EX-101.LAB) — 209KB
• aei21-20231231_pre.xml (EX-101.PRE) — 118KB
• aei21-20231231_cal.xml (EX-101.CAL) — 26KB
• aei21-20231231_htm.xml (XML) — 281KB

BUSINESS

ITEM 1. BUSINESS. AEI Income & Growth Fund XXI Limited Partnership (the "Partnership" or the "Registrant") is a limited partnership which was organized pursuant to the laws of the State of Minnesota on August 22, 1994. The registrant is comprised of AEI Fund Management XXI, Inc. ("AFM") as Managing General Partner, the Estate of Robert P. Johnson as the Individual General Partner, and purchasers of partnership units as Limited Partners. The Partnership offered for sale up to $24,000,000 of limited partnership interests (the "Units") (24,000 Units at $1,000 per Unit) pursuant to a registration statement effective February 1, 1995. The Partnership commenced operations on April 14, 1995 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. On January 31, 1997, the Partnership offering terminated when the maximum subscription limit of 24,000 Limited Partnership Units ($24,000,000) was reached. The Partnership was organized to acquire existing and newly constructed commercial properties located in the United States, to lease such properties to tenants under net leases, to hold such properties and to eventually sell such properties. From subscription proceeds, the Partnership purchased ten properties including partial interests in seven properties, at a total cost of $19,686,525. The balance of the subscription proceeds was applied to organization and syndication costs, working capital reserves and distributions, which represented a return of capital. The properties are commercial, single tenant buildings leased under net leases. The Partnership's properties were purchased without any indebtedness. The Partnership will not finance properties in the future to obtain proceeds for new property acquisitions. If it is required to do so, the Partnership may incur short-term indebtedness, which may be secured by a portion of the Partnership's properties, to finance day-to-day cash flow requirements (including cash flow necessary to repur

BUSINESS. (Continued)

ITEM 1. BUSINESS. (Continued) In January 2021, the Managing General Partner mailed a Consent Statement (Proxy) seeking the consent of the Limited Partners to continue the Partnership for an additional 60 months or to initiate the final disposition, liquidation and distribution of all of the Partnership's properties and assets. On March 3, 2021, the votes were counted and neither proposal received the required majority vote. As a result, the Managing General Partner will continue the operations of the Partnership for an additional 60 months at which time it will ask the Limited Partners to vote on the same two proposals. Leases Although there are variations in the specific terms of the leases, the following is a summary of the general terms of the Partnership's leases. The properties are leased to 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 Partnership 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 18 years. The leases provide the tenants with two to 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 Partnership to receive additional rent in future years based on stated rent increases. Property Activity During the Last Three Years As of December 31, 2020, the Partnership owned interests in five properties with a total cost of $11,088,747. During the years ended December 31, 2021, 2022 and 2023, the Partnership sold two property interests and received net sale proceeds of $2,477,214, and $2,450,634 which resulted in net gains of $13,198, and $1,268,078, respectively. Dur

BUSINESS. (Continued)

ITEM 1. BUSINESS. (Continued) Competition The Partnership 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 Partnership. At the time the Partnership elects to dispose of its properties, the Partnership will be in competition with other persons and entities to find buyers for its properties. Employees The Partnership has no direct employees. Management services are performed for the Partnership by AEI Fund Management, Inc. (Management Company), an affiliate of AFM. For the past two fiscal years, the Management Company has not made any reductions to employee compensation plans or employee benefit plans. The Management Company believes the people who work for the Company are its most important resources and are critical to its continued success. The Management Company focuses significant attention toward attracting and retaining talented and experienced individuals to manage and support its operations. The Management Company's people are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All of the Management Company's employees must adhere to a code of conduct that is outlined in AEI's employee handbook which sets standards for appropriate behavior which includes preventing, identifying, reporting and stopping any type of discrimination. Compensation and Benefits The Management Company believes its compensation package and benefits are competitive with others in its industry. In addition to base pay, all eligible employees participate in the Management Company bonus program. The Management Company also offers employees a broad range of benefits, including medical, dental and ancillary health benefits and paid parental leave. Workplace Safety and Wellness The safety and well-being of the Management Company's employees is its priority. The Management Company has implemented an Employee

RISK FACTORS

ITEM 1A. RISK FACTORS. Not required for a smaller reporting company.

UNRESOLVED STAFF COMMENTS

ITEM 1B. UNRESOLVED STAFF COMMENTS. Not required for a smaller reporting company.

CYBERSECURITY

ITEM 1C. CYBERSECURITY. In the past two years and with the guidance of a qualified third-party, the Management Company has made improvements in the cybersecurity program across the Entity, and has developed processes for deterring, detecting, evaluating, and responding to potential cybersecurity incidents. In doing so, the Management Company focuses on its employees, networks, applications and data with a cybersecurity plan, informed by nationally recognized frameworks. The Management Company's third-party advisor has performed cybersecurity risk assessments of its information technology security processes and implemented technologies to lessen risk. Using third party services, the Management Company monitors, scans, assesses, audits, and remediates identified vulnerabilities across its networks, as appropriate. Furthermore, recognizing that the Management Company's employees are an essential line of defense in cybersecurity, it requires employees to participate in training and testing programs through which it provides education on the risk of potential cybersecurity incidents, methods for identification of such incidents and appropriate responses. The Management Company's policies and processes are informed by industry standard practices regarding application security, access management, device protection, network management, and data loss prevention and recovery. The Management Company's cybersecurity incident response plan includes retention of external experts for prompt assistance following discovery of any material incident. This cybersecurity incident response plan is part of its ongoing cybersecurity vulnerability management, and it endeavors to maintain appropriate controls to identify, monitor, analyze and address potential cybersecurity incidents, including potential unauthorized access to its networks and applications, along with detection of potential unusual activity within its networks or applications. Any potential cybersecurity incident is im

PROPERTIES

ITEM 2. PROPERTIES. Investment Objectives The Partnership's investment objectives are to acquire existing or newly-developed commercial properties throughout the United States that offer the potential for (i) regular cash distributions of lease income; (ii) growth in lease income through rent escalation provisions; (iii) preservation of capital through all-cash transactions; (iv) capital growth through appreciation in the value of properties; and (v) stable property performance through long-term lease contracts. The Partnership 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 General Partners attempt to diversify the properties by tenant and geographic location. Description of Properties The Partnership's properties are commercial, single tenant buildings. The properties were acquired on a debt-free basis and are leased to tenants under net leases, classified as operating leases. The Partnership holds an undivided fee simple interest in the properties. The Partnership'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 longterm lease, there is little competition until the Partnership decides to sell the property. At this time, the Partnership 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 Partnership would be competing with other real estate owners, who have property vacancies, to attract a new tenant to lease the property. The Partnership's tenants operate in industries that are competitive and can be affected by factors such as changes in regional or local economies, seasonality and changes in consumer preference. 6

PROPERTIES. (Continued)

ITEM 2. PROPERTIES. (Continued) The following table is a summary of the properties that the Partnership acquired and owned as of December 31, 2023. Property Purchase Date Original Property Cost Tenant Annual Lease Payment Annual Rent Per Sq. Ft. Jared Jewelry Store Auburn Hills, MI (40%) 1/14/05 $ 1,466,048 Sterling Jewelers Inc. $ 105,560 $ 45.82 Best Buy Store Eau Claire, WI 1/31/08 $ 7,057,096 Best Buy Stores, L.P. $ 548,801 $ 11.58 Dollar Tree Cincinnati, OH 2/3/16 $ 1,809,915 (1) Dollar Tree Stores, Inc. $ 122,169 $ 12.28 Advance Auto Chelsea, AL 5/14/21 $ 1,760,000 Advance Auto Parts Inc. $ 110,000 $ 15.71 Memorial Hospital Diamondhead, MS (40%) 3/22/22 $ 1,580,000 Memorial Hospital at Gulfport, Inc. $ 104,373 $ 9.04 (1) Does not include acquisition costs that were expensed. The properties listed above with a partial ownership percentage are owned with the following affiliated entities: Jared Jewelry store in Auburn Hills, Michigan (AEI Income & Growth Fund 25 LLC) and Memorial Hospital in Diamondhead, Mississippi (AEI Net Lease Income Fund 36 LP). The Partnership 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 Partnership's percentage share of the properties' land, building, liabilities, revenues and expenses. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 18 years. The leases provide the tenants with two to four five-year renewal options subject to the same terms and conditions as the primary term. The leases for the Best

PROPERTIES. (Continued)

ITEM 2. PROPERTIES. (Continued) For tax purposes, the Partnership'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 component of a property is land improvements which are depreciated using an accelerated method over 15 years. Since the Partnership has tax-exempt Partners, the Partnership 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 equals the book depreciable cost of the properties plus the amortizable cost of the related intangible lease assets, except for properties purchased during 2009 through 2017. For those properties, acquisition expenses that were expensed for book purposes were capitalized and added to the basis of the property for tax depreciation purposes. At December 31, 2023, all properties listed above were 100% occupied.

LEGAL PROCEEDINGS

ITEM 3. LEGAL PROCEEDINGS. None.

MINE SAFETY DISCLOSURES

ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK- HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. (a) As of December 31, 2023, there were 937 holders of record of the registrant's Limited Partnership 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 Partnership did not sell any equity securities that are not registered under the Securities Act of 1933. Distributions of $6,929 and $6,904 were declared to the General Partners and $686,004 and $683,503 were declared to the Limited Partners for 2023 and 2022, respectively. The distributions were made on a quarterly basis and represented Net Cash Flow, as defined, except as discussed below. These distributions should not be compared with dividends paid on capital stock by corporations. (b) Not applicable. 8

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK- HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. (c) Pursuant to Section 7.7 of the Partnership Agreement, as amended, each Limited Partner has the right to present Units to the Partnership for purchase by submitting notice to the Managing General Partner during January or July of each year. The purchase price of the Units is equal to 95% 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 General Partner in accordance with the provisions of the Partnership Agreement. Units tendered to the Partnership during January and July may be repurchased on April 1st and October 1st, respectively, of each year subject to the following limitations. The Partnership will not be obligated to purchase in any year more than 5% of the total number of Units outstanding on January 1 of such year. In no event shall the Partnership be obligated to purchase Units if, in the sole discretion of the Managing General Partner, such purchase would impair the capital or operation of the Partnership. Units tendered to the Partnership during January and July may be repurchased on April 1 st and October 1 st , respectively, of each year subject to the following limitations. The Partnership 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 Partnership be obligated to purchase Units if, in the sole discretion of the Managing General Partner, such purchase would impair the capital or operation of the Partnership. During the last three months of 2023, the Partnership did not purchase any Units. Other Information Effective April 11, 2016, the Financial Industry Regulatory Authority ("FINRA") implemented Rule 2310, a revised rule that requires securities broker-dealers to report on customer account statements the value of investment units of non-traded sec

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK-

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCK- HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. In determining the estimated value of each property, the Managing General Partner relied on some or all of the following external information sources, as well as its own experience in the commercial, net leased property industry and knowledge of each property: Opinions of value from real estate brokerage firms Appraisal reports from independent commercial property appraisers Industry market reports from real estate brokerage and appraisal firms Market values from comparable properties listed for sale or recently sold Interviews with real estate brokers and tenants Tenant financial reports and other credit information, where available The per Unit value was the aggregate estimated value of the Partnership's assets less the Partnership's liabilities, and less the value attributable to the interest of the General Partners, divided by the number of Units outstanding. The Partnership's cash, receivables and liabilities were valued at face value as of September 30, 2023. Each of the Partnership's properties were valued by dividing their annual rental income as of December 1, 2023 by a capitalization rate the Managing General Partner believed, based upon the aforementioned valuation process, to be representative of the retail market for the sale of each property. The resulting value for each property was reviewed to determine that it also reflected circumstances that may have been unique to each specific property. For recently acquired properties, an appraisal report received at or near the time of acquisition from an independent commercial property appraiser was used to determine the value of the property. The appraisal report is used to value the property for approximately one year after the date of acquisition. The valuations were estimates only, and were based on a number of assumptions which may not be accurate or complete. In addit

Properties

Properties $ 13,847,000 $ 15,116,000 Cash 207,000 175,000 Rent receivable 0 0 Current liabilities (323,000) (349,000) Value attributable to the interest of the General Partners (138,000) (149,000) Value attributable to the interest of the Limited Partners $ 13,593,000 $ 14,793,000 Limited Partnership Units outstanding 17,076 17,076 10

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

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 Partnership's financial condition and results of operations, including the following: — Market and economic conditions which affect the value of the properties the Partnership 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 the Partners; — resolution by the General Partners of conflicts with which they may be confronted; — the success of the General Partners 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 Partnership operate. Application of Critical Accounting Policies The Partnership's financial statements have been prepared in accordance with US GAAP. Preparing the financial statements requires managem

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