10-Q: AEI Income & Growth Fund XXI: Q2 2026 Update

AEI Income & Growth Fund XXI Limited Partnership reports a decrease in rental income for the first half of 2026, with net income of $110,700, as the partnership continues its liquidation process.

Summary

• For the six months ended June 30, 2026, AEI Income & Growth Fund XXI Limited Partnership reported rental income of $447,533, a decrease from $473,876 in the same period of 2025.
• Net income for the first six months of 2026 was $110,700, compared to $932,575 in the prior year, which included a significant gain from the sale of real estate.
• Operating income for the six months ended June 30, 2026, was $105,424, an increase from $100,578 in the prior year.
• The partnership's cash balance decreased by $16,083 during the first six months of 2026.
• The partnership is in the process of final liquidation, with management focused on disposing of assets.
• Distributions declared for the six months ended June 30, 2026, were $329,505, down from $541,013 in the prior year.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral to slightly negative sentiment due to declining rental income and a focus on liquidation, despite stable operational expenses and a clear path forward.

Positives

• Operating income increased to $105,424 for the first six months of 2026 from $100,578 in the same period of 2025.
• Partnership administration expenses from unrelated parties decreased to $61,065 for the first six months of 2026 from $82,997 in 2025, reflecting the liquidation process.
• The partnership expects to recognize approximately $896,000 in rental income for the full year 2026, based on scheduled rents for properties owned as of July 31, 2026.
• Management believes inflation has not significantly affected income from operations.

Negatives

• Rental income decreased to $447,533 for the first six months of 2026 from $473,876 in the same period of 2025, primarily due to the sale of one property in March 2025.
• Net income significantly decreased to $110,700 for the first six months of 2026 from $932,575 in the prior year, largely due to the absence of a large gain on sale of real estate in 2026.
• Cash balances decreased by $16,083 during the first six months of 2026, driven by distributions paid exceeding cash generated from operations.
• Distributions declared decreased to $329,505 for the first six months of 2026 from $541,013 in the prior year.

Risks

• Market and economic conditions affecting property values and rental income.
• Federal income tax consequences of rental income, deductions, and gains on sales.
• Resolution of conflicts by the General Partner.
• Success of the General Partner in locating properties with favorable risk-return characteristics.
• Effect of tenant defaults.
• Condition of the industries in which the tenants operate.
• Inflation and changing prices could adversely impact operating margins of tenants, potentially impairing their ability to pay rent.

Future Outlook

The Partnership expects to recognize approximately $896,000 in rental income for the full year 2026, based on scheduled rents for properties owned as of July 31, 2026. The continuing rent payments from properties, along with cash generated from property sales, are expected to be adequate to fund continuing distributions and meet other Partnership obligations.

Management Comments

• Management believes inflation has not significantly affected income from operations.
• The Managing General Partner has decided to begin the final liquidation process by disposing of its assets in accordance with the terms of the Partnership Agreement.
• The President and Chief Financial Officer of the Managing General Partner concluded that disclosure controls and procedures were effective as of the end of the period.

Industry Context

StockSavvy.ai notes that the real estate investment partnership is in a liquidation phase, which typically leads to declining rental income as assets are sold. This is consistent with a strategy to wind down operations rather than pursue growth.

Management Changes

Legal Proceedings

• There are no material pending legal proceedings to which the Partnership is a party or of which the Partnership's property is subject.

Related Party Transactions

• Payable to AEI Fund Management, Inc. represents the balance due for administrative and operating services performed by the affiliate. This balance is non-interest bearing and unsecured.

Stakeholder Impact

• Limited Partners will continue to receive distributions as the partnership liquidates its assets.
• Shareholders (Limited Partners) will see their ownership interest in the remaining assets increase as units are repurchased, though no repurchases occurred in the first half of 2026.
• Creditors are expected to be paid as rent payments and property sales are anticipated to be adequate to meet obligations.

Next Steps

• Continue the final liquidation process by disposing of assets.
• Fund continuing distributions and meet other Partnership obligations from rent payments and property sales.

Key Dates

Recommendation

The partnership is in liquidation, and while operations are stable, there is no significant growth potential. The focus is on winding down, making it a hold for existing investors rather than a buy. The decrease in net income and distributions, though explained by the sale of assets in the prior year, warrants caution.

Keywords

Real Estate, Partnership, Rental Income, Liquidation, Financial Statements, Distributions, Depreciation, Operating Income