UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  SeptemberJune 30, 2010 2011

Commission File Number:  000-51823

AEI INCOME & GROWTH FUND 26 LLC (Exact
(Exact name of registrant as specified in its charter) State of Delaware 41-2173048 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101 (Address of principal executive offices) (651) 227-7333 (Registrant's telephone number) Not Applicable (Former name, former address and former fiscal year, if changed since last report)

State of Delaware41-2173048
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
30 East 7th Street, Suite 1300
St. Paul, Minnesota 55101
(651) 227-7333
(Address of principal executive offices)(Registrant’s telephone number)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     [X]x Yes    [ ]o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     [ ]o Yes    [ ]o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

o Large accelerated filer
o Accelerated filer
o Non-accelerated filer
x Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [ ]o Yes    [X]x No



AEI INCOME & GROWTH FUND 26 LLC

INDEX Part I - Financial Information Item 1. Financial Statements (unaudited):


Page
Part I – Financial Information
Item 1.Financial Statements (unaudited):
Balance Sheet as of June 30, 2011 and December 31, 20103
Statements for the Periods ended June 30, 2011 and 2010:
Income4
Cash Flows5
Changes in Members' Equity (Deficit)6
Notes to Financial Statements7 - 8
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations9 - 12
Item 3.Quantitative and Qualitative Disclosures About Market Risk12
Item 4.Controls and Procedures12
Part II – Other Information
Item 1.Legal Proceedings12
Item 1A.Risk Factors12
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds13
Item 3.Defaults Upon Senior Securities13
Item 5.Other Information13
Item 6.Exhibits13
Signatures14

Page 2 of September 30, 2010 and December 31, 2009 Statements for the Periods ended September 30, 2010 and 2009: Income Cash Flows Changes in Members' Equity (Deficit) Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 5. Other Information Item 6. Exhibits Signatures 14

AEI INCOME & GROWTH FUND 26 LLC
BALANCE SHEET SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

ASSETS 2010 2009 CURRENT ASSETS: Cash $ 356,698 $ 375,652 INVESTMENTS IN REAL ESTATE: Land 5,991,984 5,991,984 Buildings and Equipment 9,384,552 9,384,552 Accumulated Depreciation (1,319,751) (1,038,213) ----------- ----------- Net Investments in Real Estate 14,056,785 14,338,323 ----------- ----------- Total Assets $14,413,483 $14,713,975 =========== ===========

  June 30,  December 31, 
  
2011
  
2010
 
Current Assets:      
Cash $361,196  $327,898 
         
Real Estate Held for Investment:        
Land  5,991,984   5,991,984 
Buildings and Equipment  9,384,552   9,384,552 
Accumulated Depreciation  (1,601,288)  (1,413,596)
Real Estate Held for Investment, Net  13,775,248   13,962,940 
Total Assets $14,136,444  $14,290,838 

LIABILITIES AND MEMBERS'MEMBERS’ EQUITY CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 15,579 $ 22,391 Distributions Payable 236,083 236,177 Unearned Rent 50,271 25,796 ----------- ----------- Total Current Liabilities 301,933 284,364 ----------- ----------- MEMBERS' EQUITY (DEFICIT): Managing Members (41,063) (31,521) Limited Members, $10 per Unit; 10,000,000 Units authorized; 1,832,736 Units issued; 1,827,736 and 1,832,736 Units outstanding in 2010 and 2009, respectively 14,152,613 14,461,132 ----------- ----------- Total Members' Equity 14,111,550 14,429,611 ----------- ----------- Total Liabilities and Members' Equity $14,413,483 $14,713,975 =========== ===========

  June 30,  December 31, 
  
2011
  
2010
 
Current Liabilities:      
Payable to AEI Fund Management, Inc. $24,379  $11,813 
Distributions Payable  236,083   236,083 
Unearned Rent  47,273   25,796 
Total Current Liabilities  307,735   273,692 
         
Members’ Equity (Deficit):        
Managing Members  (49,548)  (43,895)
Limited Members, $10 per Unit;
   10,000,000 Units authorized; 1,832,736 Units issued;
   1,827,736 Units outstanding
  13,878,257   14,061,041 
Total Members’ Equity  13,828,709   14,017,146 
Total Liabilities and Members’ Equity $14,136,444  $14,290,838 








The accompanying Notes to Financial Statements are an integral part of this statement.
Page 3 of 14

AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF INCOME FOR THE PERIODS ENDED SEPTEMBER 30 Three Months Ended Nine Months Ended 9/30/10 9/30/09 9/30/10 9/30/09 RENTAL INCOME $ 285,716 $ 285,716 $ 857,147 $ 858,356 EXPENSES: LLC Administration - Affiliates 42,897 39,679 125,983 124,174 LLC Administration and Property Management - Unrelated Parties 4,197 4,193 21,741 23,536 Depreciation 93,846 78,514 281,538 235,542 ---------- ---------- ---------- ---------- Total Expenses 140,940 122,386 429,262 383,252 ---------- ---------- ---------- ---------- OPERATING INCOME 144,776 163,330 427,885 475,104 OTHER INCOME: Interest Income 580 632 1,804 1,845 ---------- ---------- ---------- ---------- NET INCOME $ 145,356 $ 163,962 $ 429,689 $ 476,949 ========== ========== ========== ========== NET INCOME ALLOCATED: Managing Members $ 4,361 $ 4,918 $ 12,891 $ 14,308 Limited Members 140,995 159,044 416,798 462,641 ---------- ---------- ---------- ---------- $ 145,356 $ 163,962 $ 429,689 $ 476,949 ========== ========== ========== ========== NET INCOME PER LLC UNIT $ .08 $ .09 $ .23 $ .25 ========= ========== ========== ========== Weighted Average Units Outstanding - Basic and Diluted 1,827,736 1,832,736 1,829,403 1,832,736 ========= ========== ========== ==========


  
Three Months Ended June 30,
  
Six Months Ended June 30,
 
  
2011
  
2010
  
2011
  
2010
 
             
Rental Income $285,715  $285,715  $571,431  $571,431 
                 
Expenses:                
LLC Administration – Affiliates  42,163   41,672   82,519   83,086 
LLC Administration and Property
   Management – Unrelated Parties
  8,479   7,919   18,482   17,544 
Depreciation  93,846   93,846   187,692   187,692 
Total Expenses  144,488   143,437   288,693   288,322 
                 
Operating Income  141,227   142,278   282,738   283,109 
                 
Other Income:                
Interest Income  454   557   990   1,224 
                 
Net Income $141,681  $142,835  $283,728  $284,333 
                 
Net Income Allocated:                
Managing Members $4,251  $4,285  $8,512  $8,530 
Limited Members  137,430   138,550   275,216   275,803 
Total $141,681  $142,835  $283,728  $284,333 
                 
Net Income per LLC Unit $.08  $.08  $.15  $.15 
                 
Weighted Average Units Outstanding –
      Basic and Diluted
  1,827,736   1,827,736   1,827,736   1,830,236 
                 










The accompanying Notes to Financial Statements are an integral part of this statement.
Page 4 of 14

AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30 2010 2009 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 429,689 $ 476,949 Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities: Depreciation 281,538 235,542 Decrease in Receivables 0 2,283 Decrease in Payable to AEI Fund Management, Inc. (6,812) (8,152) Increase in Unearned Rent 24,475 24,475 ----------- ----------- Total Adjustments 299,201 254,148 ----------- ----------- Net Cash Provided By Operating Activities 728,890 731,097 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions Paid to Members (708,437) (717,009) Redemption Payments (39,407) 0 ----------- ----------- Net Cash Used For Financing Activities (747,844) (717,009) ----------- ----------- NET INCREASE (DECREASE) IN CASH (18,954) 14,088 CASH, beginning of period 375,652 388,653 ----------- ----------- CASH, end of period $ 356,698 $ 402,741 =========== ===========


  
Six Months Ended June 30,
 
  
2011
  
2010
 
Cash Flows from Operating Activities:      
Net Income $283,728  $284,333 
         
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating Activities:
        
Depreciation  187,692   187,692 
Increase (Decrease) in Payable to
   AEI Fund Management, Inc.
  12,566   (2,803)
Increase (Decrease) in Unearned Rent  21,477   8,304 
Total Adjustments  221,735   193,193 
Net Cash Provided By
   Operating Activities
  505,463   477,526 
         
Cash Flows from Financing Activities:        
Distributions Paid to Members  (472,165)  (472,354)
Redemption Payments  0   (39,407)
Net Cash Used For
   Financing Activities
  (472,165)  (511,761)
         
Net Increase (Decrease) in Cash  33,298   (34,235)
         
Cash, beginning of period  327,898   375,652 
         
Cash, end of period $361,196  $341,417 
         












The accompanying Notes to Financial Statements are an integral part of this statement.
Page 5 of 14

AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT) FOR THE NINE MONTHS ENDED SEPTEMBER 30 Limited Member Managing Limited Units Members Members Total Outstanding BALANCE, December 31, 2008 $(21,717) $14,885,886 $14,864,169 1,832,736.0 Distributions Declared (17,923) (687,276) (705,199) Net Income 14,308 462,641 476,949 -------- ----------- ----------- ------------ BALANCE, September 30, 2009 $(25,332) $14,661,251 $14,635,919 1,832,736.0 ======== =========== =========== ============ BALANCE, December 31, 2009 $(31,521) $14,461,132 $14,429,611 1,832,736.0 Distributions Declared (21,251) (687,092) (708,343) Redemption Payments (1,182) (38,225) (39,407) (5,000.0) Net Income 12,891 416,798 429,689 -------- ----------- ----------- ------------ BALANCE, September 30, 2010 $(41,063) $14,152,613 $14,111,550 1,827,736.0 ======== =========== =========== ============


  
Managing Members
  
Limited Members
  
Total
  
Limited Member Units Outstanding
 
             
Balance, December 31, 2009 $(31,521) $14,461,132  $14,429,611   1,832,736.0 
                 
Distributions Declared  (14,168)  (458,092)  (472,260)    
                 
Redemption Payments  (1,182)  (38,225)  (39,407)  (5,000.0)
                 
Net Income  8,530   275,803   284,333     
                 
Balance, June 30, 2010 $(38,341) $14,240,618  $14,202,277   1,827,736.0 
                 
                 
Balance, December 31, 2010 $(43,895) $14,061,041  $14,017,146   1,827,736.0 
                 
Distributions Declared  (14,165)  (458,000)  (472,165)    
                 
Net Income  8,512   275,216   283,728     
                 
Balance, June 30, 2011 $(49,548) $13,878,257  $13,828,709   1,827,736.0 
                 



















The accompanying Notes to Financial Statements are an integral part of this statement.
Page 6 of 14

AEI INCOME & GROWTH FUND 26 LLC
NOTES TO FINANCIAL STATEMENTS SEPTEMBER
JUNE 30, 2010 2011

(1)  The condensed statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements.  The adjustments made to these condensed statements consist only of normal recurring adjustments.  Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the registrant's latest annual report on Form 10-K.

(2)  Organization -

AEI Income & Growth Fund 26 LLC ("Company"(“Company”), a Limited Liability Company, was formed on March 14, 2005 to acquire and lease commercial properties to operating tenants.  The Company's operations are managed by AEI Fund Management XXI, Inc. ("AFM"(“AFM”), the Managing Member.  Robert P. Johnson, the President and sole director of AFM, serves as the Special Managing Member.  AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder.  AEI Fund Management, Inc. ("AEI"(“AEI”), an affiliate of AFM, performs the administrative and operating functions for the Company.

The terms of the offering called for a subscription price of $10 per LLC Unit, payable on acceptance of the offer.  The Company commenced operations on April 3, 2006 when minimum subscriptions of 150,000 LLC Units ($1,500,000) were accepted.  The offering terminated October 19, 2007, when the extended offering period expired.  The Company received subscriptions for 1,832,736 Units.  Under the terms of the Operating Agreement, the Limited Members and Managing Members contributed funds of $18,327,360 and $1,000, respectively.  The Company shall continue until December 31, 2055, unless dissolved, terminated and liquidated prior to that date.

During operations, any Net Cash Flow, as defined, which the Managing Members determine to distribute will be distributed 97% to the Limited Members and 3% to the Managing Members.  Distributions to Limited Members will be made pro rata by Units. AEI INCOME & GROWTH FUND 26 LLC NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued)

Any Net Proceeds of Sale, as defined, from the sale or financing of properties which the Managing Members determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Members and 1% to the Managing Members until the Limited Members receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 6.5% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed from Net Cash Flow; (ii) any remaining balance will be distributed 90% to the Limited Members and 10% to the Managing Members.  Distributions to the Limited Members will be made pro rata by Units.
Page 7 of 14

AEI INCOME & GROWTH FUND 26 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)

(2)  Organization – (Continued)

For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of property, will be allocated 97% to the Limited Members and 3% to the Managing Members.  Net losses from operations will be allocated 99% to the Limited Members and 1% to the Managing Members.

For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Operating Agreement as follows: (i) first, to those Members with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Members and 1% to the Managing Members until the aggregate balance in the Limited Members' capital accounts equals the sum of the Limited Members' Adjusted Capital Contributions plus an amount equal to 6.5% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously allocated; (iii) third, the balance of any remaining gain will then be allocated 90% to the Limited Members and 10% to the Managing Members.  Losses will be allocated 99% to the Limited Members and 1% to the Managing Members.

The Managing Members are not required to currently fund a deficit capital balance.  Upon liquidation of the Company or withdrawal by a Managing Member, the Managing Members will contribute to the Company an amount equal to the lesser of the deficit balances in their capital accounts or 1.01% of the total capital contributions of the Limited Members over the amount previously contributed by the Managing Members.

(3) Reclassification - Certain items in the prior period's financial statements have been reclassified to conform to 2010 presentation. These reclassifications had no effect on Members' capital, net income or cash flows. AEI INCOME & GROWTH FUND 26 LLC NOTES TO FINANCIAL STATEMENTS (Continued) (4)  Payable to AEI Fund Management, Inc. -

AEI Fund Management, Inc. performs the administrative and operating functions for the Company.  The payable to AEI Fund Management represents the balance due for those services.  This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. (5)

(4)  Fair Value Measurements -

As of SeptemberJune 30, 2010,2011, the Company hashad no assets or liabilities measured at fair value on a recurring basis or nonrecurring basis.

Page 8 of 14

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This section contains "forward-looking statements" which represent management's expectations or beliefs concerning future events, including statements regarding anticipated application of cash, expected returns from rental income, growth in revenue, the sufficiency of cash to meet operating expenses, rates of distribution, and other matters.  These, and other forward- lookingforward-looking statements, should be evaluated in the context of a number of factors that may affect the Company'sCompany’s financial condition and results of operations, including the following: Market and economic conditions which affect the value of the properties the Company owns and the cash from rental income such properties generate; the federal income tax consequences of rental income, deductions, gain on sales and other items and the effects of these consequences for Members; resolution by the Managing Members of conflicts with which they may be confronted; the success of the Managing Members of locating properties with favorable risk return characteristics; the effect of tenant defaults; and the condition of the industries in which the tenants of properties owned by the Company operate.

Market and economic conditions which affect the value of the properties the Company owns and the cash from rental income such properties generate;
the federal income tax consequences of rental income, deductions, gain on sales and other items and the effects of these consequences for Members;
resolution by the Managing Members of conflicts with which they may be confronted;
the success of the Managing Members of locating properties with favorable risk return characteristics;
the effect of tenant defaults; and
the condition of the industries in which the tenants of properties owned by the Company operate.

Application of Critical Accounting Policies

The preparation of the Company'sCompany’s financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates these estimates on an ongoing basis, including those related to the carrying value of investments in real estate and the allocation by AEI Fund Management, Inc. of expenses to the Company as opposed to other funds they manage. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) Prior to January 1, 2009, the

The Company purchasedpurchases properties and recordedrecords them in the financial statements at cost (including capitalized(not including acquisition expenses). For acquisitions completed on or after January 1, 2009, acquisition-related transaction costs will be expensed as incurred as a result of the Company adopting new guidance on business combinations that expands the scope of acquisition accounting.  The Company tests long-lived assets for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable.  For properties the Company will hold and operate, management determines whether impairment has occurred by comparing the property's probability- weightedproperty’s probability-weighted future undiscounted cash flows to its current carrying value.  For properties held for sale, management determines whether impairment has occurred by comparing the property'sproperty’s estimated fair value less cost to sell to its current carrying value.  If the carrying value is greater than the net realizable value, an impairment loss is recorded to reduce the carrying value of the property to its net realizable value.  Changes in these assumptions or analysis may cause material changes in the carrying value of the properties.

AEI Fund Management, 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'sfund’s affairs.  They also allocate expenses at the end of each month that are not directly related to a fund'sfund’s operations based upon the number of investors in the fund and the fund'sfund’s capitalization relative to other funds they manage.  The Company reimburses these expenses subject to detailed limitations contained in the Operating Agreement.

Page 9 of 14

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

Management of the Company has discussed the development and selection of the above accounting estimates and the management discussion and analysis disclosures regarding them with the managing member of the Company.

Results of Operations

For the ninesix months ended SeptemberJune 30, 20102011 and 2009,2010, the Company recognized rental income of $857,147 and $858,356, respectively. $571,431 during each period.  Based on the scheduled rent for the properties owned as of July 31, 2011, the Company expects to recognize rental income of approximately $1,149,000 in 2011.

For the ninesix months ended SeptemberJune 30, 20102011 and 2009,2010, the Company incurred LLC administration expenses from affiliated parties of $125,983$82,519 and $124,174,$83,086, respectively.  These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Members.  During the same periods, the Company incurred LLC administration and property management expenses from unrelated parties of $21,741$18,482 and $23,536,$17,544, 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.

For the ninesix months ended SeptemberJune 30, 20102011 and 2009, depreciation expense was $281,538 and $235,542, respectively. The increase was due to the Company reclassifying the Sports Authority store in Wichita, Kansas from held-for-sale status to held-for-use status during the fourth quarter of 2009. For the nine months ended September 30, 2010, and 2009, the Company recognized interest income of $1,804$990 and $1,845,$1,224, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

Management believes inflation has not significantly affected income from operations.  Leases may contain rent increases, based on the increase in the Consumer Price Index over a specified period, which will result in an increase in rental income over the term of the leases.  Inflation also may cause the real estate to appreciate in value.  However, inflation and changing prices may have an adverse impact on 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.

Liquidity and Capital Resources

During the ninesix months ended SeptemberJune 30, 2011, the Company's cash balances increased $33,298 as a result of cash generated from operating activities in excess of distributions paid to the Members.  During the six months ended June 30, 2010, the Company's cash balances decreased $18,954$34,235 as a result of distributions and redemption payments paid to the Members in excess of cash generated from operating activities. During the nine months ended September 30, 2009, the Company's cash balances increased $14,088 as a result of cash generated from operating activities in excess of distributions paid to the Members.

Net cash provided by operating activities decreasedincreased from $731,097$477,526 in 20092010 to $728,890$505,463 in 20102011 mainly as a result of a decrease in total rental and interest income in 2010, an increase in LLC administration and property management expenses in 2010 and net timing differences in the collection of payments from the tenants and the payment of expenses.

Page 10 of 14

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

The Company's primary use of cash flow, other than investment in real estate, is distribution and redemption payments to Members.  The Company declares its regular quarterly distributions before the end of each quarter and pays the distribution in the first week after the end of each quarter.  The Company attempts to maintain a stable distribution rate from quarter to quarter.  Redemption payments are paid to redeeming Members on a semi-annual basis.

For the ninesix months ended SeptemberJune 30, 20102011 and 2009,2010, the Company declared distributions of $708,343$472,165 and $705,199,$472,260, respectively.  The Limited Members received distributions of $687,092$458,000 and $687,276$458,092 and the Managing Members received distributions of $21,251$14,165 and $17,923$14,168 for the periods, respectively.

The Company may acquire Units from Limited Members who have tendered their Units to the Company.  Such Units may be acquired at a discount.  The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year.  In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company.

During the first six months of 2011, the Company did not redeem any Units from the Limited Members.  On April 1, 2010, one Limited Member redeemed a total of 5,000 Units for $38,225 in accordance with the Operating Agreement.  The Company acquired these Units using Net Cash Flow from operations.  During 2009, the Company did not redeem any Units from the Limited Members. The redemptions increase the remaining Limited Member'sMembers’ ownership interest in the Company.  As a result of this redemption payment and pursuant to the Operating Agreement, the Managing Members received distributions of $1,182 in 2010. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)

The continuing rent payments from the properties should be adequate to fund continuing distributions and meet other obligations on both a short-term and long-term basis.

The Economy and Market Conditions

The impact of conditions in the current economy, including the turmoil in the credit markets, has adversely affected many real estate investment funds.  However, the absence of mortgage financing on the Company'sCompany’s properties eliminates the risks of foreclosure and debt-refinancing that can negatively impact the value and distributions of leveraged real estate investment funds.  Nevertheless, a prolonged economic downturn may adversely affect the operations of the Company'sCompany’s tenants and their cash flows.  If a tenant were to default on its lease obligations, the Company'sCompany’s income would decrease, its distributions would likely be reduced and the value of its properties might decline.

The Company'sCompany’s plan is to periodically sell properties to generate capital gains that would be included in the Company'sCompany’s regular quarterly distributions and to make special distributions on occasion.  Beginning in the fourth quarter of 2008, general economic conditions caused the volume of property sales to slow dramatically for all real estate sellers. During 2008, 2009 and 2010, the Company did not complete any property sales.  Until such time as economic conditions allow the Company to begin selling properties at attractive prices, quarterly distributions will reflect the distribution of net core rental income and capital reserves, if any.  Distribution rates in 20102011 are expected to be consistent with distribution rates in 2009. 2010.

Page 11 of 14

ITEM 3.  QUANTITATIVE AND& QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for a smaller reporting company.

ITEM 4.  CONTROLS AND PROCEDURES.

(a)  Disclosure Controls and Procedures.

Under the supervision and with the participation of management, including its President and Chief Financial Officer, the Managing Member of the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"“Exchange Act”)).  Based upon that evaluation, the President and Chief Financial Officer of the Managing Member concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to management, including the President and Chief Financial Officer of the Managing Member, in a manner that allows timely decisions regarding required disclosure.

(b)  Changes in Internal Control Over Financial Reporting.

During the most recent period covered by this report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

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

ITEM 1A.  RISK FACTORS.

Not required for a smaller reporting company.

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ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND& USE OF PROCEEDS.

(a) None.

(b) Not applicable.

(c) Pursuant to Section 7.7 of the Operating Agreement, each Limited Member has the right to present Units to the Company for purchase by submitting notice to the Managing Member during January or July of each year.  The purchase price of the Units is equal to 85% of the net asset value per Unit, as of the first business day of January or July of each year, as determined by the Managing Member in accordance with the provisions of the Operating Agreement.  The purchase price is equal to 100% of the net asset value per Unit in the case of Units of a deceased investor, who purchased the Units in the initial offering and who is a natural person, including Units held by an investor that is an IRA or other qualified plan for which the deceased person was the primary beneficiary, or Units held by an investor that is a grantor trust for which the deceased person was the grantor.

Units tendered to the Company during January and July are redeemed on April 1st1st and October 1st,1st, respectively, of each year subject to the following limitations.  The Company will not be obligated to purchase in any year more than 2% of the total number of Units outstanding on January 1 of such year.  In no event shall the Company be obligated to purchase Units if, in the sole discretion of the Managing Member, such purchase would impair the capital or operation of the Company.  During the period covered by this report, the Company did not purchase any Units.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.  OTHER INFORMATION.

None. PART II - OTHER INFORMATION (Continued)

ITEM 6.  EXHIBITS. 31.1

31.1Certification of Chief Executive Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of Chief Financial Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002.

32   
Certification of Chief Executive Officer and Chief Financial Officer of Managing Member pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Page 13 of Chief Executive Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer of Managing Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Chief Executive Officer and Chief Financial Officer of Managing Member pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 14


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 10, 2010 AEI Income & Growth Fund 26 LLC By: AEI Fund Management XXI, Inc. Its: Managing Member By: /s/ ROBERT P JOHNSON Robert P. Johnson President (Principal Executive Officer) By: /s/ PATRICK W KEENE Patrick W. Keene Chief Financial Officer (Principal Accounting Officer)


Dated:  August 12, 2011AEI Income & Growth Fund 26 LLC
By:AEI Fund Management XXI, Inc.
Its:Managing Member
By:  /s/ROBERT P JOHNSON
Robert P. Johnson
President
(Principal Executive Officer)
By:  /s/PATRICK W KEENE
Patrick W. Keene
Chief Financial Officer
(Principal Accounting Officer)


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