10-K: AEI Income & Growth Fund XXII Reports Lower Rental Income Due to Property Sale in 2024

AEI Income & Growth Fund XXII Limited Partnership reports decreased rental income and net income for 2024, primarily due to the sale of a property.

Summary

• AEI Income & Growth Fund XXII Limited Partnership reported its annual results for the year ended December 31, 2024.
• The Partnership's rental income decreased to $440,126 in 2024 from $547,015 in 2023, due to a property vacancy and subsequent sale.
• Net income decreased to $16,521 in 2024 from $51,795 in 2023.
• The Partnership sold one property interest in December 2024 for net proceeds of $661,301, resulting in a net gain of $32,817.
• As of December 31, 2024, the Partnership owned interests in three properties with a total cost of $7,041,532.
• Distributions declared to Limited Partners were $268,572 in 2024, compared to $409,097 in 2023.
• The estimated value of the Partnership's Units was $615 per Unit as of December 31, 2024.
• The Partnership expects to recognize rental income of approximately $446,000 in 2025 based on scheduled rent as of February 28, 2025.

Sentiment

Score: 5

Explanation: The report presents a mixed picture with decreased income and distributions offset by a property sale and continued operations. The sentiment is neutral.

Positives

• The Partnership generated $661,301 in net proceeds from the sale of a property in December 2024.
• The Partnership realized a net gain of $32,817 from the sale of the property.
• The lease for the Advance Auto Parts store in Indianapolis, Indiana was extended to April 30, 2035.
• The Partnership's cybersecurity program has been improved with the guidance of a third-party.

Negatives

• Rental income decreased from $547,015 in 2023 to $440,126 in 2024.
• Net income decreased from $51,795 in 2023 to $16,521 in 2024.
• Distributions to Limited Partners decreased from $409,097 in 2023 to $268,572 in 2024.

Risks

• The Partnership is a minor factor in the commercial real estate business and faces competition from entities with greater financial resources.
• Failure of major tenants to meet their lease obligations could materially affect the Partnership's net income and cash distributions.
• Economic factors, higher interest rates, and inflation could impact tenants and operating partners.
• Future cybersecurity threats may materially affect the Management Company's business strategy, results of operations, or financial condition.

Future Outlook

The Partnership expects to recognize rental income of approximately $446,000 in 2025 based on scheduled rent as of February 28, 2025.

Management Comments

• The Management Company believes the people who work for the Company are its most important resources and are critical to its continued success.
• Management believes inflation has not significantly affected income from operations.

Industry Context

The Partnership operates in the commercial real estate business, which is highly competitive and subject to economic conditions, interest rates, and inflation.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• Comparable companies would include other small, privately-held real estate partnerships focused on single-tenant commercial properties.
• Without specific benchmarks for similar partnerships, it's difficult to assess the Partnership's performance relative to its peers.

Related Party Transactions

• The Partnership has related party transactions with AEI Fund Management, Inc. for management services and expense reimbursements.
• The Partnership owns properties as tenants-in-common with affiliated entities.

Stakeholder Impact

• Decreased rental income and net income may negatively impact distributions to Limited Partners.
• The sale of a property may provide capital for future investments or distributions.

Next Steps

• The Managing General Partner expects to again submit the question to liquidate to a vote by the Limited Partners in approximately five years.
• The Partnership will continue to hold its properties and evaluate opportunities for sale or reinvestment.

Key Dates

Keywords

real estate, limited partnership, rental income, property sales, distributions, commercial properties, net leases