UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: March 31, 2007
Commission file number: 000-51823
AEI INCOME & GROWTH FUND 26 LLC
(Exact Name of Small Business Issuer 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
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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. Yes [X] No
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes No [X]
Transitional Small Business Disclosure Format: Yes No [X]
AEI INCOME & GROWTH FUND 26 LLC
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of March 31, 2007 and December 31, 2006
Statements for the Period ended March 31, 2007 and 2006:
Operations
Cash Flows
Changes in Members' Equity (Deficit)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
Signatures
AEI INCOME & GROWTH FUND 26 LLC
BALANCE SHEET
MARCH 31, 2007 AND DECEMBER 31, 2006
(Unaudited)
ASSETS
2007 2006
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,924,129 $ 151,644
INVESTMENTS IN REAL ESTATE:
Land 2,036,625 2,036,625
Buildings and Equipment 5,508,375 5,508,375
Accumulated Depreciation (138,107) (83,023)
----------- -----------
Net Investments in Real Estate 7,406,893 7,461,977
----------- -----------
Total Assets $ 9,331,022 $ 7,613,621
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 58,521 $ 86,504
Distributions Payable 123,743 87,919
Unearned Rent 5,973 0
----------- -----------
Total Current Liabilities 188,237 174,423
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members' Equity (2,899) (1,278)
Limited Members' Equity, $10 per Unit;
10,000,000 Units authorized;
1,088,040 and 882,127 Units issued and
outstanding in 2007 and 2006, respectively 9,145,684 7,440,476
----------- -----------
Total Members' Equity 9,142,785 7,439,198
----------- -----------
Total Liabilities and Members' Equity $ 9,331,022 $ 7,613,621
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
2007 2006
INCOME
Rental Income $ 143,373 $ 0
EXPENSES:
LLC Administration - Affiliates 22,757 1,214
LLC Administration and Property
Management - Unrelated Parties 5,475 1,500
Depreciation 55,084 0
----------- -----------
Total Expenses 83,316 2,714
----------- -----------
OPERATING INCOME (LOSS) 60,057 (2,714)
OTHER INCOME:
Interest Income 9,669 1
----------- -----------
NET INCOME (LOSS) $ 69,726 $ (2,713)
=========== ===========
NET INCOME (LOSS) ALLOCATED:
Managing Members $ 2,092 $ (2,713)
Limited Members 67,634 0
----------- -----------
$ 69,726 $ (2,713)
=========== ===========
NET INCOME PER LLC UNIT $ .07 $ 0
=========== ===========
Weighted Average Units Outstanding 960,242 0
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 69,726 $ (2,713)
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 55,084 0
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (27,983) 2,709
Increase in Unearned Rent 5,973 0
----------- -----------
Total Adjustments 33,074 0
----------- -----------
Net Cash Provided By (Used For)
Operating Activities 102,800 (4)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Members 2,059,131 0
Organization and Syndication Costs (301,527) 0
Increase in Distributions Payable 35,824 0
Distributions to Members (123,743) 0
----------- -----------
Net Cash Provided By
Financing Activities 1,669,685 0
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,772,485 (4)
CASH AND CASH EQUIVALENTS, beginning of period 151,644 1,004
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,924,129 $ 1,000
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 26 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2005 $ 1,004 $ 0 $ 1,004 0
Net Loss (2,713) 0 (2,713) 0
-------- ---------- ----------- -----------
BALANCE, March 31, 2006 $ (1,709) $ 0 $ (1,709) 0
======== ========== =========== ===========
BALANCE, December 31, 2006 $ (1,278) $7,440,476 $ 7,439,198 882,126.8
Capital Contributions 0 2,059,131 2,059,131 205,913.1
Organization and
Syndication Costs 0 (301,527) (301,527)
Distributions (3,713) (120,030) (123,743)
Net Income 2,092 67,634 69,726
-------- ---------- ----------- -----------
BALANCE, March 31, 2007 $ (2,899) $9,145,684 $9,142,785 1,088,039.9
======== ========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 26 LLC
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2007
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Company, 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 Company 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
Company's latest annual report on Form 10-KSB.
(2) Organization -
AEI Income & Growth Fund 26 LLC (the 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), 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), an affiliate
of AFM, performs the administrative and operating functions
for the Company.
The terms of the offering call for a subscription price of
$10 per LLC Unit, payable on acceptance of the offer. Under
the terms of the Operating Agreement, 10,000,000 LLC Units
are available for subscription which, if fully subscribed,
will result in contributed Limited Members' capital of
$100,000,000. The Company commenced operations on April 3,
2006 when minimum subscriptions of 150,000 LLC Units
($1,500,000) were accepted. At March 31, 2007, 1,088,039.9
Units ($10,880,399) were subscribed and accepted by the
Company. The Managing Members have contributed capital of
$1,000. 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.
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) Investments in Real Estate -
During the second quarter of 2006, the Company purchased a
40% interest in a Sports Authority (formerly Gart Sports)
store in Wichita, Kansas for $2,230,753. The property is
leased to TSA Stores, Inc. under a Lease Agreement with a
remaining primary term of 11 years and initial annual rent
of $186,059. The remaining interest in the property was
purchased by AEI Income & Growth Fund 25 LLC, an affiliate
of the Company.
AEI INCOME & GROWTH FUND 26 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On June 1, 2006, the Company purchased a 55% interest in an
Advance Auto Parts store in Middletown, Ohio for $1,022,289.
The property is leased to Advance Stores Company, Inc. under
a Lease Agreement with a remaining primary term of 13.2
years and initial annual rent of $71,679. The remaining
interest in the property was purchased by AEI Income &
Growth Fund 24 LLC, an affiliate of the Company.
On September 21, 2006, the Company purchased a 37% interest
in an Applebee's restaurant in Indianapolis, Indiana for
$1,130,049. During the fourth quarter of 2006, the Company
purchased the remaining 63% interest in this property for
$1,924,138. The property is leased to Apple Indiana II LLC
under a Lease Agreement with a primary term of 20 years and
initial annual rent of $220,262.
On December 29, 2006, the Company purchased a 40% interest
in an Applebee's restaurant in Crawfordsville, Indiana for
$1,237,771. The property is leased to Apple Indiana II LLC
under a Lease Agreement with a primary term of 20 years and
initial annual rent of $89,289. The remaining interest in
the property was purchased by AEI Income & Growth Fund XXII
Limited Partnership, an affiliate of the Company.
The Sports Authority store, the Applebee's restaurant in
Crawfordsville, Indiana and the 63% interest in the
Applebee's restaurant in Indianapolis, Indiana were
purchased from AEI Fund Management XVII, Inc. (AFMX), an
affiliate of the Managing Members. In order to facilitate
the Company's purchase of these property interests, AFMX
purchased the properties from unrelated third parties. For
property interests purchased from AFMX, the price paid by
the Company was equal to the price paid by AFMX plus the
expenses incurred to transfer ownership of the property to
the Company, which were minimal. There was no benefit
arising out of the transactions to the Managing Members or
their affiliates apart from compensation otherwise permitted
by the Operating Agreement.
(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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
The Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of federal
securities laws 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 looking statements made by the Company,
must be evaluated in the context of a number of factors that may
affect the Company'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
affects 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.
The Application of Critical Accounting Policies
The preparation of the Company'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 real
estate and the allocation by AEI Fund Management, Inc. of
expenses to the Company as opposed to other funds they manage.
The Company purchases properties and records them in the
financial statements at the lower of cost or estimated realizable
value. The Company initially records the properties at cost
(including capitalized acquisition expenses). The Company is
required to periodically evaluate the carrying value of
properties to determine whether their realizable value has
declined. For properties the Company will hold and operate,
management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows to its
current carrying value. For properties held for sale, management
determines whether impairment has occurred by comparing the
property's estimated fair value less cost to sell to its current
carrying value. If the carrying value is greater than the
realizable value, an impairment loss is recorded to reduce the
carrying value of the property to its realizable value. A change
in these assumptions or analysis could cause material changes in
the carrying value of the properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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'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 Company reimburses these expenses
subject to detailed limitations contained in the Operating
Agreement.
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
The Company was organized on March 14, 2005. From this
date until the initial subscription proceeds of $1,932,316 were
released from escrow on April 3, 2006, the Company had received
only $1,000 of capital from the Managing Members, had not
conducted any business operations other than those related to the
offering and sale of Units and had not admitted any investors as
Limited Members.
For the three months ended March 31, 2007, the Company
recognized rental income of $143,373, representing three months
rent from four properties. At March 31, 2007, the scheduled
annual rent for the four properties was $585,895.
For the three months ended March 31, 2007 and 2006, the
Company incurred LLC administration expenses from affiliated
parties of $22,757 and $1,214, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Members. During
the same periods, the Company incurred LLC administration and
property management expenses from unrelated parties of $5,475 and
$1,500, 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 three months ended March 31, 2007, the Company
recognized interest income of $9,669 mainly from subscription
proceeds temporarily invested in a money market account.
Inflation has had a minimal effect on 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. In addition, leases may contain rent clauses
which entitle the Company to receive additional rent in future
years if gross receipts for the property exceed certain specified
amounts. Increases in sales volumes of the tenants, due to
inflation and real sales growth, may 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
Liquidity and Capital Resources
The Company's primary sources of cash are proceeds from
the sale of Units, interest income, rental income and proceeds
from the sale of property. Its primary uses of cash are
investment in real properties, payment of expenses involved in
the sale of Units, the management of properties, the organization
and administration of the Company, and the payment of
distributions.
The Company generated $102,800 of cash from operations
during the three months ended March 31, 2007, representing net
income of $69,726 and a non-cash expense of $55,084 for
depreciation, which were partially offset by $22,010 of net
timing differences in the collection of payments from the tenants
and the payment of expenses.
The major components of the Company's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the three months ended
March 31, 2007, the Company did not purchase any real properties.
During the year ended December 31, 2006, the Company expended
$7,545,000 to invest in real properties (inclusive of acquisition
expenses). During the second quarter of 2006, the Company
purchased a 40% interest in a Sports Authority (formerly Gart
Sports) store in Wichita, Kansas for $2,230,753. On June 1,
2006, the Company purchased a 55% interest in an Advance Auto
Parts store in Middletown, Ohio for $1,022,289. On September 21,
2006, the Company purchased a 37% interest in an Applebee's
restaurant in Indianapolis, Indiana for $1,130,049. During the
fourth quarter of 2006, the Company purchased the remaining 63%
interest in this property for $1,924,138. On December 29, 2006,
the Company purchased a 40% interest in an Applebee's restaurant
in Crawfordsville, Indiana for $1,237,771.
The Sports Authority store, the Applebee's restaurant in
Crawfordsville, Indiana and the 63% interest in the Applebee's
restaurant in Indianapolis, Indiana were purchased from AEI Fund
Management XVII, Inc. (AFMX), an affiliate of the Managing
Members. In order to facilitate the Company's purchase of these
property interests, AFMX purchased the properties from unrelated
third parties. For property interests purchased from AFMX, the
price paid by the Company was equal to the price paid by AFMX
plus the expenses incurred to transfer ownership of the property
to the Company, which were minimal. There was no benefit arising
out of the transactions to the Managing Members or their
affiliates apart from compensation otherwise permitted by the
Operating Agreement.
During the offering of Units, the Company's primary source
of cash flow will be from the sale of LLC Units. The Company
commenced the offering of LLC Units to the public through a
registration statement that became effective October 20, 2005 and
will continue until October 19, 2007, unless all 10,000,000 LLC
Units are sold before then. The registration statement indicated
that the Company would not be capitalized, and all subscription
funds would be held in escrow, until the Company had received
subscriptions for 150,000 Units ($1,500,000). The Company
obtained subscriptions for the 150,000 Units required for release
of escrow proceeds and on April 3, 2006, the Company accepted
subscriptions for 193,231.6 Units for aggregate proceeds of
$1,932,316. Through March 31, 2007, the Company raised a total
of $10,880,399 from the sale of 1,088,039.9 Units. From
subscription proceeds, the Company paid organization and
syndication costs (which constitute a reduction of capital) of
$1,608,544.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
After completion of the acquisition phase, the Company's
primary use of cash flow 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 ten days after the end of each quarter.
For the three months ended March 31, 2007, the Company declared
distributions of $123,743, which were distributed 97% to Limited
Members and 3% to the Managing Members.
Beginning in April 2009, 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.
The Operating Agreement requires that all proceeds from
the sale of Units, subject to a reasonable reserve for ongoing
operations, be invested or committed to investment in properties
by the later of two years after the date of the Prospectus or
twelve months after the offering terminates. As of the date of
this filing, the Company had no formal contractual commitments to
expend capital.
Until capital is invested in properties, the Company will
remain extremely liquid. After completion of property
acquisitions, the Company will attempt to maintain a cash reserve
of only approximately .5% of subscription proceeds. Because
properties are purchased for cash and leased under triple-net
leases, this is considered adequate to satisfy most
contingencies.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of 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 its disclosure controls and
procedures (as defined in Rule 13a-14(c) under the 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, the disclosure controls and
procedures of the Company are adequately designed to ensure that
information required to be disclosed by us in the reports 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 controls
There were no significant changes made in the Company's
internal controls during the most recent period covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Company's 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 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
(a) During the period covered by this report, the Company
did not sell any equity securities that are not registered under
the Securities Act of 1933.
(b) The registration statement for the offering (No. 333-
125266) was declared effective on October 20, 2005. The offering
commenced on October 20, 2005 and is ongoing. AEI Securities,
Inc. (ASI) is the dealer manager of the offering. The
registration statement covers 10,000,000 Units of limited
liability company interest at an aggregate price of up to $100
million. Through March 31, 2007, the Company had sold
1,088,039.9 Units for gross offering proceeds of $10,880,399.
From gross offering proceeds, the Company paid $1,055,070
in selling commissions to ASI, an affiliate of the Managing
Members. Of this amount, $699,042 was re-allowed by ASI to
participating broker/dealers not affiliated with the Managing
Members. The gross offering proceeds were further reduced by
underwriting discounts of $9,454 and other organization and
syndication costs of $544,020 of which $286,535 was paid to AEI
Fund Management, Inc., an affiliate of the Managing Members, for
costs incurred in connection with managing the Company's offering
and organization. From inception to March 31, 2007, the Company
paid commissions, organization and syndication costs totaling
$1,608,544.
From the net offering proceeds, the Company expended
$7,545,000 to acquire real estate of which $7,424,287 represented
cash paid to unaffiliated sellers of real estate and $120,713
represented cash paid to reimburse AEI Fund Management, Inc. for
costs and direct expenses incurred by it in acquiring properties
on behalf of the Company.
(c) Beginning in January 2009, 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 of the Units, 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. In
the case of the death of a Limited Member who is a natural person
the purchase price is equal to 100% of the net asset value of the
Units, including Units held in an IRA or other qualified plan or
grantor trust. Units tendered to the Company during January and
July are redeemed on April 1st and October 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.
PART II - OTHER INFORMATION
(Continued)
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5.OTHER INFORMATION
None.
ITEM 6.EXHIBITS
31.1 Certification 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.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: May 11, 2007 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)