10-K: AEI Income & Growth Fund XXII Reports 2025 Results

AEI Income & Growth Fund XXII Limited Partnership reported a significant increase in net income for 2025 driven by property sales, as it continues its final liquidation process.

Summary

• Net income increased significantly to $241,738 in 2025 from $16,521 in 2024.
• Rental income decreased to $417,382 in 2025 from $440,126 in 2024 due to a property sale.
• Sold one property interest in July 2025 for net proceeds of $920,594, resulting in a net gain of $200,237.
• Sold one property interest in December 2024 for net proceeds of $661,301, resulting in a net gain of $32,817.
• Cash balance decreased by $441,943 in 2025, primarily due to distributions and unit repurchases exceeding operating cash flow, partially offset by property sale proceeds.
• Repurchased 720.72 Limited Partnership Units for $380,973 in 2025.
• The Managing General Partner has decided to begin the final liquidation process by disposing of its assets.
• Estimated value of the Partnership's Units was $549 per Unit as of December 31, 2025.
• Total assets decreased from $6,609,145 in 2024 to $5,180,225 in 2025.
• Partners' Capital decreased from $6,456,623 in 2024 to $5,031,293 in 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report given the ongoing liquidation, significant decline in unit value from inception, and the net cash outflow despite property sales. While net income increased due to asset sales, this reflects a winding-down phase rather than operational growth.

Positives

• Significant increase in net income to $241,738 in 2025 from $16,521 in 2024.
• Realized substantial gains on property sales: $200,237 in 2025 and $32,817 in 2024.
• Interest income increased to $19,082 in 2025 from $5,944 in 2024.
• Partnership administration expenses from affiliates decreased to $74,820 in 2025 from $116,430 in 2024, partly due to headcount reduction.
• Net cash provided by operating activities increased to $306,492 in 2025 from $291,413 in 2024.
• All properties were 100% occupied as of December 31, 2025.
• Management has made improvements in the cybersecurity program and has not experienced any material cybersecurity incidents.

Negatives

• Rental income decreased to $417,382 in 2025 from $440,126 in 2024 due to a property sale.
• Cash balance decreased by $441,943 in 2025, primarily due to distributions and unit repurchases exceeding operating cash flow.
• The Partnership is undergoing a final liquidation process, indicating a winding down of operations.
• The estimated value of the Partnership's Units decreased to $549 per Unit as of December 31, 2025, from an implied higher value based on the original offering price of $1,000 per Unit.
• Total assets decreased from $6,609,145 in 2024 to $5,180,225 in 2025.
• Partners' Capital decreased from $6,456,623 in 2024 to $5,031,293 in 2025.
• Distributions paid to partners significantly increased to $1,284,208 in 2025 from $311,472 in 2024, potentially drawing down cash reserves.
• The Partnership is a minor factor in the commercial real estate business with numerous competitors having greater financial resources.
• Dependence on a few major tenants (three tenants contributed 100% of rental income in 2025; two are anticipated to remain major tenants in 2026).

Risks

• Any failure of major tenants could materially affect the Partnership's net income and cash distributions.
• Competition from numerous entities with greater financial resources in the commercial real estate business when disposing of properties.
• Potential future risks from cybersecurity threats (exploitation of vulnerabilities, ransomware, denial of service, supply chain attacks) may materially affect business strategy, reputation, results of operations, and/or financial condition.
• Market and economic conditions (higher interest rates, inflation) affect property values and rental income.
• Federal income tax consequences of rental income, deductions, and gains on sales.
• Conflicts of interest faced by the General Partners.
• The condition of the industries in which the tenants of properties owned by the Partnership operate.
• In the event of a tenant default, the Partnership would compete with other real estate owners to attract a new tenant to lease the property.
• Inflation and changing prices may adversely impact the operating margins of the properties' tenants, which could impair their ability to pay rent and subsequently reduce the Net Cash Flow available for distributions.

Future Outlook

The Partnership expects to recognize rental income of approximately $420,000 in 2026. The Managing General Partner has decided to begin the final liquidation process by disposing of its assets. The Partnership expects to sell some or all of its properties prior to its final liquidation and to reinvest the proceeds from such sales in additional properties, or distribute them to partners, provided that sufficient proceeds are distributed to cover federal and state income taxes related to any taxable gain.

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.
• The Management Company believes its compensation package and benefits are competitive with others in its industry.
• Management believes inflation has not significantly affected income from operations.
• The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Partnership obligations on both a short-term and long-term basis.

Industry Context

StockSavvy.ai notes that the commercial real estate sector, particularly for single-tenant net lease properties, generally offers stable income streams but can be sensitive to tenant credit risk and broader economic conditions. The Partnership's ongoing liquidation process and reliance on property sales for liquidity and distributions reflect a mature fund strategy, potentially influenced by current market dynamics for asset disposition. The focus on cybersecurity improvements aligns with increasing industry-wide concerns over digital asset protection.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess against global benchmarks. The Partnership operates as a niche limited partnership focused on single-tenant net lease commercial properties, making direct comparisons challenging without more specific industry data.
• The estimated value per unit of $549, compared to the original $1,000 offering price, suggests a significant decline in value over its operational life, which would need to be benchmarked against similar long-duration, illiquid real estate funds to determine relative performance.

Management Changes

Corporate Governance

Legal Proceedings

• None.

Related Party Transactions

• The Partnership owns a 50% interest in the Talecris Plasma Facility in Dallas, Texas, as a tenant-in-common with AEI Income & Growth Fund 25 LLC, an affiliated entity with common ownership.
• AEI (an affiliate of AFM) is reimbursed for costs incurred in providing services related to managing the Partnership's operations and properties, maintaining books, and communicating with Limited Partners, totaling $74,820 in 2025 and $116,430 in 2024.
• AEI is reimbursed for direct expenses paid to third parties for Partnership administration and property management, totaling $84,398 in 2025 and $69,899 in 2024.
• AEI was reimbursed $6,262 in 2024 for services related to property sales (none in 2025).
• The payable to AEI Fund Management, Inc. was $46,857 as of December 31, 2025, and $32,946 as of December 31, 2024.
• Cumulative reimbursements to General Partners and affiliates for certain expenses (organization, offering, acquisition, sales, administrative, overhead) are limited by the Partnership Agreement and did not exceed the limitation as of December 31, 2025.
• Total compensation, distributions, and cost reimbursements to General Partners and Affiliates from inception (July 31, 1996) to December 31, 2025, include: Selling Commissions ($1,691,722), other Organization and Offering Costs ($762,880), Acquisition Expenses ($629,927), administrative services ($4,189,066), property disposition services ($721,498), 3% of Net Cash Flow ($629,035), and 1% or 10% of Net Proceeds of Sale distributions ($53,702).

Stakeholder Impact

• Shareholders (Limited Partners): Experience a decrease in the estimated value of their units ($549 per unit vs. $1,000 original). They receive distributions from Net Cash Flow and Net Proceeds of Sale, but the ongoing liquidation means the Partnership is winding down, limiting future growth potential. Unit repurchases increase remaining Limited Partners' ownership interest.
• General Partners: Receive a share of Net Cash Flow (3%) and Net Proceeds of Sale (1% initially, then 10% after Limited Partners meet certain thresholds), and distributions from unit repurchases. They manage the liquidation process.
• Employees: The Management Company made headcount reductions in 2024, impacting employee numbers, though it emphasizes attracting and retaining talent.
• Tenants: Continue to be responsible for net lease obligations. The Partnership's reliance on a few major tenants means their financial health is critical.
• Creditors: The Partnership operates debt-free for property acquisitions, limiting direct creditor risk related to property financing, but short-term indebtedness for cash flow is possible.

Next Steps

• Continue the final liquidation process by disposing of assets.
• Sell some or all properties prior to final liquidation.
• Reinvest proceeds from property sales in additional properties or distribute them to Partners.
• Continue to fund distributions and meet other Partnership obligations from rent payments and property sales.
• Anticipate recognizing approximately $420,000 in rental income in 2026.
• Repurchase tendered Units on April 1st and October 1st of each year, subject to limitations.

Key Dates

Recommendation

The Partnership is in a final liquidation phase, actively disposing of its assets. The estimated unit value of $549 is significantly below the original $1,000 offering price, indicating substantial capital erosion over its lifespan. While property sales generate gains and distributions, this is a return of capital in a winding-down entity, not a growth investment. The illiquid nature of the units and the lack of a ready market further diminish investment appeal. A seasoned investor would likely seek to exit this position to reallocate capital to opportunities with clearer growth prospects or better liquidity.

Keywords

Commercial Real Estate, Net Lease Properties, Limited Partnership, Property Sales, Liquidation, SEC Filing, Real Estate Investment, Annual Report, Income Fund, Asset Disposition, Tenant-in-Common