XAEIU 10-K & 10-Q changes, risk factors and insider trading

The fair values of in-place leases will include estimated direct costs associated with obtaining a new tenant, and opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease. Direct costs associated with obtaining a new tenant may include commissions, tenant improvements, and other direct costs and are estimated, in part, by management’s consideration of current market costs to execute a similar lease. These direct costs will be included in intangible lease assets on the balance sheet and will be amortized on a straight-line basis to expense over the remaining term of the respective leases. The value of opportunity costs will be calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. These intangibles will be included in intangible lease assets on the balance sheet and will be amortized on a straight-line basis to expense over the remaining term of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of in-place lease assets relating to that lease would be expensed.

The determination of the relative fair values of the assets and liabilities acquired will require the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount and capitalization rates, interest rates and other variables. If management’s estimates or assumptions prove inaccurate, the result would be an inaccurate allocation of purchase price, which could impact the amount of reported net income.income (loss).

TheAEI ManagementFund CompanyManagement, Inc. allocates expenses to each of the funds they manage primarily on the basis of the number of hours devoted by their employees to each fund’s affairs. They also allocate expenses at the end of each month that are not directly related to a fund’s operations based upon the number of investors in the fund and the fund’s capitalization relative to other funds they manage. The Partnership reimburses these expenses subject to detailed limitations contained in the Partnership Agreement.

For the years ended December 31, 20242025 and 2023,2024, the Partnership recognized rental income of $440,126$417,382 and $547,015,$440,126, respectively. In 2024,2025, rental income decreased due to a vacancy on one property beginningsale in NovemberJuly 2023, which was subsequently sold in December 2024.2025. This was partially offset by rent increases on onetwo property.properties. Based on the scheduled rent for the properties owned as of February 28, 2025,2026, the Partnership expects to recognize rental income of approximately $446,000$420,000 in 2025.2026.

For the years ended December 31, 20242025 and 2023,2024, the Partnership incurredwas allocated Partnership administration expenses from affiliated parties of $116,430$74,820 and $121,277,$116,430, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Partners. These expenses were lower in 2025, when compared to 2024, mainly due to a reduction in headcount and a decrease in property related management expenses. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $69,899$84,398 and $44,384,$69,899, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. In 2024,2025, these expenses increased due to onethe propertytiming beingof vacant.tax and audit services.

Net cash provided by operating activities decreasedincreased from $438,994 in 2023 to $291,413 in 2024 to $306,492 in 2025 as a result of aan decreaseincrease in rentalinterest income,income and net timing differences in the collection of payments from the tenants and payment of expensestenants, which was partially offset by an increase in interest income and a decrease in Partnershiprental administration expenses.income.

The major components of the Partnership's cash flow from investing activities are investments in real estate and proceeds from the sale of real estate. During the year ended December 31, 2023, the Partnership did not complete any property acquisitions or property sales. During the year ended December 31, 2024, the Partnership generated cash flow from the sale of real estate of $661,301. During the year ended December 31, 2025, the Partnership generated cash flow from the sale of real estate of $920,594.

For the threesix months ended MarchJune 31,30, 2026 and 2025, the Partnership recognized rental income of $96,729$193,457 and $111,056,$219,843, respectively. In 2026, rental income decreased due to the sale of one property in July 2025. This was partially offset by rent increases on two properties effective July 2025 and September 2025. Based on the scheduled rent for the properties owned as of AprilJuly 30,31, 2026, the Partnership expects to recognize rental income of approximately $389,000 in 2026.

For the threesix months ended MarchJune 31,30, 2026 and 2025, the Partnership incurred Partnership administration expenses from affiliated parties of $18,376$34,565 and $20,868,$37,727, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Partners. These expenses were lower in 2026, when compared to 2025, mainly due to lower costs associated with management of the properties. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $28,423$44,610 and $34,822,$55,097, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. These expenses were lower in 2026, when compared to 2025, mainly due to fewer properties being managed as the Fund is in the final liquidation process.

For the threesix months ended MarchJune 31,30, 2026 and 2025, the Partnership recognized interest income of $1,916$3,928 and $5,374,$9,125, respectively.

The Partnership may repurchase Units from Limited Partners who have tendered their Units to the Partnership. Such Units may be acquired at a discount. The Partnership will not be obligated to purchase in any year any number of Units that, when aggregated with all other transfers of Units that have occurred since the beginning of the same calendar year (excluding Permitted Transfers as defined in the Partnership Agreement), would exceed 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. During the three months ended March 31, 2026 and 2025, the Partnership did not repurchase any Units from the Limited Partners.

As of MarchJune 31,30, 2026 and December 31, 2025, the Partnership had no material off-balance sheet arrangements that had or are reasonably likely to have current or future effects on its financial condition, results of operations, liquidity or capital resources.