Item 2.01 Completion of Acquisition or Disposition of Assets.
On July 3, 2014, the Partnership purchased a 30% interest in a Gander Mountain
store in Champaign, Illinois for $2,122,500 from 2006 Prospect Champaign, LLC,
an unrelated third party. The property is leased to Gander Mountain Company
under a Lease Agreement with a remaining primary term of 15 years. The Lease may
be renewed by the tenant for up to four consecutive terms of five years
each. The Lease requires an initial annual rent of $167,772 for the 30%
interest, which will increase every five years by $5,825. The Lease is a net
lease under which the tenant is responsible for real estate taxes, insurance,
maintenance, repairs and operating expenses of the property. The only exceptions
are the Partnership is responsible for repairs to the structural components of
the building and roof. The remaining interests in the property were purchased by
AEI Accredited Investor Fund V LP and AEI National Income Property Fund VIII LP,
affiliates of the Partnership.
The Partnership purchased the property with cash received from the sale of
property. The store was constructed in 1994 and remodeled for Gander Mountain
use in 2014. The store is a 39,457 square foot building situated on
approximately 3.5 acres of land. The freestanding retail store is located at
2006 North Prospect Avenue, Champaign, Illinois.
Gander Mountain Company ("GMC"), headquartered in St. Paul, Minnesota, operates
the nation's largest retail network of stores for hunting, fishing, camping, and
marine products and accessories. Established in 1960, GMC offers a wide
assortment of outdoor equipment, firearms, camping supplies, fishing and marine
products, rugged outdoor apparel, casual footwear, as well as gunsmith and
archery services. GMC is a fully integrated multi-channel retailer offering
retail, catalog and internet sales. GMC operates 127 retail stores with
approximately 6.9 million square feet of retail space in 24 states. Twin Cities
Business Magazine estimates GMC has annual of $1.3 billion and employs 5,800
people. GMC is a privately held company that has provided the General Partner
with audited financial statements for the five years through February 1, 2014.
They have requested that this financial information be kept confidential.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired - Because the property is leased
to a single tenant on a long-term basis under a net lease that transfers
substantially all of the operating costs to the tenant, we believe that
financial information about the tenant is more relevant than financial
statements of the property. Financial information of the tenant is presented in
the last paragraph of Item 2.01.
(b) Pro forma financial information - A limited number of pro forma adjustments
are required to illustrate the effects of the above transaction on the
Partnership's balance sheet and income statement. The following narrative
description is furnished in lieu of the pro forma statements:
Assuming the Partnership had acquired the property on January 1, 2013
Partnership's Real Estate Held for Investment would have increased by $2,122,500
and its Current Assets (cash) would have decreased by $2,122,500
For the year ended December 31, 2013
, Income from Continuing Operations would
have increased $95,025
, representing an increase in rental income of $167,772
and an increase in depreciation and amortization expense of $72,747
. For the
three months ended March 31, 2014
, Income from Continuing Operations would have
, representing an increase in rental income of $41,943
increase in depreciation and amortization expense of $18,187
The net effect of these pro forma adjustments would have caused Net Income to
increase from $1,705,255
and from $141,850
would have resulted in Net Income of $78.36
per Limited Partnership
Unit outstanding for the year ended December 31, 2013
and the three months ended
March 31, 2014
(c) Shell company transactions - Not Applicable.
(d) Exhibits - Not Required. The property acquired represents less than 15% of
the total assets of the Partnership as of July 3, 2014