10-Q

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:  September 30, 2021

Commission File Number:  000-51823

AEI INCOME & GROWTH FUND 26 LLC

(Exact name of registrant as specified in its charter)

State of Delaware	41-2173048
(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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
NONE	NONE	NONE

Securities registered pursuant to Section 12(g) of the Act:

Limited Liability Company Units

(Title of class)

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. ☒ Yes    ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes    ☐ No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☐ Accelerated filer
☒ Non-accelerated filer	☒ Smaller reporting company
☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes    ☒ No

As of September 30, 2021, there were 1,678,443.2 Units of limited partnership interest outstanding and owned by nonaffiliates of the registrant.

AEI INCOME & GROWTH FUND 26 LLC

INDEX

				Page
Part I – Financial Information
	Item 1.	Financial Statements (unaudited):
		Balance Sheets as of September 30, 2021 and December 31, 2020		3
		Statements for the Periods ended September 30, 2021 and 2020:
			Operations	4
			Cash Flows	5
			Changes in Members' Equity	6
		Notes to Financial Statements		7 - 13
	Item 2.	Management's Discussion and Analysis of Financial
			Condition and Results of Operations	13 - 19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
	Item 4.	Controls and Procedures		19
Part II – Other Information
	Item 1.	Legal Proceedings		19
	Item 1A.	Risk Factors		19
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
	Item 3.	Defaults Upon Senior Securities		20
	Item 4.	Mine Safety Disclosures		20
	Item 5.	Other Information		20
	Item 6.	Exhibits		20
Signatures				21

2

AEI INCOME & GROWTH FUND 26 LLC

BALANCE SHEETS

ASSETS

		September 30,		December 31,
		2021		2020
		(unaudited)
Current Assets:
Cash	$	1,223,788	$	1,355,227
Rent Receivable		6,453		17,747
Total Current Assets		1,230,241		1,372,974
Real Estate Investments:
Land		2,829,432		2,848,286
Buildings		7,156,951		7,714,695
Acquired Intangible Lease Assets		808,152		808,152
Real Estate Held for Investment, at cost		10,794,535		11,371,133
Accumulated Depreciation and Amortization		(3,436,920)		(3,651,340)
Real Estate Held for Investment, Net		7,357,615		7,719,793
Long-Term Rent Receivable		0		1,613
Total Assets	$	8,587,856	$	9,094,380

LIABILITIES AND MEMBERS’ EQUITY

Current Liabilities:
Payable to AEI Fund Management, Inc.	$	92,088	$	53,953
Distributions Payable		92,886		94,433
Total Current Liabilities		184,974		148,386
Long-Term Liabilities:
Acquired Below-Market Lease Intangibles, Net		118,319		140,507
Members’ Equity:
Managing Members		(108,274)		(92,647)
Limited Members – 10,000,000 Units authorized;    1,678,443.2 and 1,738,006.0 Units issued and    outstanding as of 9/30/2021 and 12/31/2020		8,392,837		8,898,134
Total Members’ Equity		8,284,563		8,805,487
Total Liabilities and Members’ Equity	$	8,587,856	$	9,094,380

The accompanying Notes to Financial Statements are an integral part of these statements.

3

AEI INCOME & GROWTH FUND 26 LLC

STATEMENTS OF OPERATIONS

(unaudited)

		Three Months Ended September 30				Nine Months Ended September 30
		2021		2020		2021		2020
Rental Income	$	166,502	$	165,870	$	499,069	$	497,193
Expenses:
LLC Administration – Affiliates		35,233		27,189		99,605		81,936
LLC Administration and Property    Management – Unrelated Parties		17,604		21,279		68,811		78,932
Depreciation and Amortization		91,332		95,130		276,033		284,844
Total Expenses		144,169		143,598		444,449		445,712
Operating Income		22,333		22,272		54,620		51,481
Other Income:
Gain on Sale of Real Estate		0		0		18,606		0
Interest Income		285		328		866		3,105
Total Other Income		285		328		19,472		3,105
Net Income	$	22,618	$	22,600	$	74,092	$	54,586
Net Income Allocated:
Managing Members	$	679	$	678	$	2,223	$	1,638
Limited Members		21,939		21,922		71,869		52,948
Total	$	22,618	$	22,600	$	74,092	$	54,586
Net Income per LLC Unit	$	.01	$	.01	$	.04	$	.03
Weighted Average Units Outstanding –       Basic and Diluted		1,678,443		1,738,006		1,698,297		1,738,006

The accompanying Notes to Financial Statements are an integral part of these statements.

4

AEI INCOME & GROWTH FUND 26 LLC

STATEMENTS OF CASH FLOWS

(unaudited)

		Nine Months Ended September 30
		2021		2020
Cash Flows from Operating Activities:
Net Income (Loss)	$	74,092	$	54,586
Adjustments to Reconcile Net Income To Net Cash Provided by Operating Activities:
Depreciation and Amortization		259,527		268,338
Gain on Sale of Real Estate		(18,606)		0
(Increase) Decrease in Rent Receivable		12,907		(19,360)
Increase (Decrease) in Payable to    AEI Fund Management, Inc.		38,135		(11,825)
Increase (Decrease) in Unearned Rent		0		(420)
Total Adjustments		291,963		236,733
Net Cash Provided By (Used For)    Operating Activities		366,055		291,319
Cash Flows from Investing Activities:
Proceeds from Sale of Real Estate		99,069		0
Cash Flows from Financing Activities:
Distributions Paid to Members		(281,752)		(283,298)
Repurchase of LLC Units		(314,811)		0
Net Cash Provided By (Used For)    Investing Activities		(596,563)		(283,298)
Net Increase (Decrease) in Cash		(131,439)		8,021
Cash, beginning of period		1,355,227		1,331,120
Cash, end of period	$	1,223,788	$	1,339,141

The accompanying Notes to Financial Statements are an integral part of these statements.

5

AEI INCOME & GROWTH FUND 26 LLC

STATEMENTS OF CHANGES IN MEMBERS' EQUITY

(unaudited)

		Managing Members		Limited Members		Total	Limited Member Units Outstanding
Balance, December 31, 2019	$	(80,397)	$	9,294,214	$	9,213,817	1,738,006.0
Distributions Declared		(2,833)		(91,599)		(94,432)
Net Income		138		4,466		4,604
Balance, March 31, 2020		(83,092)		9,207,081		9,123,989	1,738,006.0
Distributions Declared		(2,833)		(91,599)		(94,432)
Net Income		822		26,560		27,382
Balance, June 30, 2020		(85,103)		9,142,042		9,056,939	1,738,006.0
Distributions Declared		(2,833)		(91,600)		(94,433)
Net Income		678		21,922		22,600
Balance, September 30, 2020	$	(87,258)	$	9,072,364	$	8,985,106	1,738,006.0
Balance, December 31, 2020	$	(92,647)	$	8,898,134	$	8,805,487	1,738,006.0
Distributions Declared		(2,833)		(91,600)		(94,433)
Net Income		482		15,573		16,055
Balance, March 31, 2021		(94,998)		8,822,107		8,727,109	1,738,006.0
Distributions Declared		(2,786)		(90,100)		(92,886)
Repurchase of LLC Units		(9,444)		(305,367)		(314,811)	(59,562.8)
Net Income		1,062		34,357		35,419
Balance, June 30, 2021		(106,166)		8,460,997		8,354,831	1,678,443.2
Distributions Declared		(2,787)		(90,099)		(92,886)
Net Income		679		21,939		22,618
Balance, September 30, 2021	$	(108,274)	$	8,392,837	$	8,284,563	1,678,443.2

The accompanying Notes to Financial Statements are an integral part of these statements.

6

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2021

(unaudited)

(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 United States Generally Accepted Accounting Principles (US GAAP) 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 10K.

(2)  Organization –

AEI Income & Growth Fund 26 LLC (“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 previous Chief Executive Officer and sole director of AFM, served as the Special Managing Member until his withdrawal date effective March 31, 2020. AFM is a wholly owned subsidiary of AEI Capital Corporation of which the Estate of Robert Johnson and Patricia Johnson, the wife of the deceased, own a majority interest. AEI Fund Management, Inc. (“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 ended. 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.

7

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(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.

In August 2021, the Managing Member mailed a Consent Statement (Proxy) seeking the consent of the Limited Members, as required by Section 6.1 of the Operating Agreement, to initiate the final disposition, liquidation and distribution of all of the Company’s properties and assets within the next 12 to 24 months. On October 12, 2021, the proposal was approved with a majority of Units voting in favor of the proposal. As a result, the Managing Member is proceeding with the planned liquidation of the Company.

8

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(3)  Recently Issued Accounting Pronouncements –

In April 2020, the Financial Accounting Standards Board (FASB) issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under current lease guidance. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance.

During the year ended December 31, 2020, the Company provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under lease guidance if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease.

Substantially, all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its rent receivables as tenant payments accrue and continues to recognize rental income. During the year ended December 31, 2020, the Company has entered into lease modifications that deferred $19,360, which was recognized as rental income for those deferred months in 2020. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021.

(4)  Real Estate Investments –

The Company owns a 40% interest in a former Sports Authority store in Wichita, Kansas. On March 2, 2016, the tenant, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2020, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. On March 23, 2021, a motion to dismiss the bankruptcy case was issued by a federal judge to The Sports Authority, Inc., the Company will therefore not be receiving any of the past due rent. The owners listed the property for lease with a real estate broker in the Wichita area. While the property was vacant, the Company was responsible for its 40% share of real estate taxes and other costs associated with maintaining the property.

9

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(4)  Real Estate Investments – (Continued)

On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property. The tenant operates a Biomat USA Plasma Center in the space. The Company’s 40% share of annual rent, which commenced on June 18, 2018, is $37,071. Biomat agreed to pay for the costs to divide the building into two separate spaces, the costs of tenant improvements to remodel the Biomat space and 28% of the cost to replace the roof.

On August 27, 2019, the Company entered into a lease agreement with a primary term of 10 years with BigTime Fun Center, LLC as a replacement tenant for 57% of the square footage of the property. The tenant will operate an indoor sports entertainment center in the space. The Company’s 40% share of annual rent, which was to commence on February 23, 2020, is $78,000. As part of the agreement, the Company was to pay a tenant improvement allowance of $64,000 when certain conditions are met by the tenant. Due to ongoing difficulties due to the COVID-19 Pandemic the Company was negotiating a rent commencement date of April 1, 2021. As a part of the negotiations the tenant improvement allowance was to be replaced with a ten month rent abatement starting April 1, 2021. Additionally, this agreement would forebear rent and additional charges for the period from February 23, 2020 to March 31, 2021. In September 2019, the Company paid $32,760 to a real estate broker for its 40% share of the lease commission due as part of the lease transaction. This amount was capitalized and will be amortized over the term of the lease. On January 22, 2021 the owner of Big Time Fun Center, LLC informed the Company that it does not intend to open the Wichita property. As a result of the tenant informing the Company of their intention not to open, the full amount of the lease commission was amortized in the fourth quarter of 2020. The property is currently being marketed for lease with a real estate broker in the Wichita area.

The Company owned a 55% interest in an Advance Auto Parts store in Middletown, Ohio. The remaining interest in the property was owned by an affiliate of the Company. On July 31, 2019, the lease term ended, and the tenant returned possession of the property to the owners. While the property was vacant, the Company was responsible for its 55% share of real estate taxes and other costs associated with maintaining the property. The owners have listed the property for sale or lease with a real estate broker in the Middletown area. The annual rent from this property represented approximately 11% of the total annual rent of the Company’s property portfolio. The loss of rent and increased expenses related to this property will decrease the Company’s cash flow.

Based on its long-lived asset valuation analysis, the Company determined the Advance Auto store was impaired. Based on its long-lived asset valuation analysis in the fourth quarter of 2020, the Company recognized a real estate impairment of $78,376 to decrease the carrying value to the estimated fair value of $82,500. The charge was recorded against the cost of the land and building.

10

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(4)  Real Estate Investments – (Continued)

In April 2021, the Company entered into an agreement to sell its 55% interest in the Advance Auto Parts store in Middletown, Ohio to an unrelated third party. On June 29, 2021, the sale closed with the Company receiving net proceeds of $99,069, which resulted in a gain of $18,606. At the time of sale, the cost and related accumulated depreciation and amortization was $576,598 and $496,135, respectively.

In November 2021, the Company entered into an agreement to sell its Dollar Tree store in West Point, Mississippi to an unrelated third party. The sale is subject to contingencies and may not be completed. If the sale is completed, the Company expects to receive net proceeds of approximately $1,591,000, which will result in a net gain of approximately $332,000.

(5) 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.

(6)  Members’ Equity –

For the nine months ended September 30, 2021 and 2020, the Company declared distributions of $280,205 and $283,297, respectively. The Limited Members were allocated distributions of $271,799 and $274,798 and the Managing Members were allocated distributions of $8,406 and $8,499 for the periods, respectively. The Limited Members' distributions represented $0.16 per LLC Unit outstanding using 1,698,297 and 1,738,006 weighted average Units in 2021 and 2020, respectively. The distributions represented $0.04 and $0.03 per Unit of Net Income and $0.12 and $0.13 per Unit of return of contributed capital in 2021 and 2020, respectively.

For the nine months ended September 30, 2021, the Company repurchased a total of 59,562.8 Units for $305,367 from eight Limited Members in accordance with the Operating Agreement. The Company acquired these Units using net sales proceeds. For the nine months ended September 30, 2020, the Company did not repurchase any Units from the Limited Members. The repurchases increase the remaining Limited Members’ ownership interest in the Company. As a result of these repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of $9,444 in 2021.

11

AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(7) Fair Value Measurements –

Fair value, as defined by US GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. US GAAP establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. US GAAP requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1 inputs, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

At September 30, 2021 and December 31, 2020, the Company had no financial assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure. The Company had the following nonfinancial assets measured on a nonrecurring basis that were recorded at fair value during 2020.

At December 31, 2020, the Advance Auto store in Middletown, Ohio was written down to its estimated fair value of $82,500 after completing our long-lived asset valuation analysis. The resulting impairment charge of $78,376 was included in earnings for the fourth quarter of 2020. The fair value of the property was based upon comparable sales of similar properties, which are considered Level 2 inputs in the valuation hierarchy.

(8)  COVID-19 Outbreak –

During the first quarter of 2020, there was a global outbreak of COVID-19 which continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving, and as cases of the virus have continued to be identified in additional countries, many countries have reacted by instituting quarantines, placing restrictions on travel, and limiting hours of operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as retail, restaurants and transportation. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID19 presents material uncertainty and risk with respect to the Company’s performance and financial results, such as the potential negative impact to the tenants of its properties, the potential closure of certain of its properties, increased costs of operations, decrease in values of its properties, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Up to the date of this filing, the Company has entered into a rent deferral agreement with one tenant of the six properties owned by the Company. In June 2020, the Company entered into an agreement with the tenant of the Zales store in Enid, Oklahoma to defer base rent in April and May 2020. The tenant started paying the deferred amounts in twelve equal monthly installments beginning on February 1, 2021.

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AEI INCOME & GROWTH FUND 26 LLC

NOTES TO FINANCIAL STATEMENTS

(8)  COVID-19 Outbreak – (Continued)

The Company has elected not to account for these deferrals of rent as a lease modification under COVID-19 guidance issued by the FASB. Deferred rent of $19,360 was recognized as rental income during the year ended December 31, 2020 and a corresponding rent receivable was recorded. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021. The Company continues to work closely with tenants to determine the best course of action to meet the tenants short-term rental needs during these unprecedented times.

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-looking statements, should 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 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 Company’s financial statements have been prepared in accordance with US GAAP. Preparing the financial statements requires management to use judgment in the application of these accounting policies, including making estimates and assumptions. These judgments will affect the reported amounts of the Company’s assets and liabilities and the disclosure of contingent assets and liabilities as of the dates of the financial statements and will affect the reported amounts of revenue and expenses during the reporting periods. It is possible that the carrying amount of the Company’s assets and liabilities, or the results of reported operations, will be affected if management’s estimates or assumptions prove inaccurate.

Management of the Company evaluates the following accounting estimates on an ongoing basis, and has discussed the development and selection of these estimates and the management discussion and analysis disclosures regarding them with the managing member of the Company.

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

Allocation of Purchase Price of Acquired Properties

Upon acquisition of real properties, the Company records them in the financial statements at cost. The purchase price is allocated to tangible assets, consisting of land and building, and to identified intangible assets and liabilities, which may include the value of above market and below market leases and the value of in-place leases. The allocation of the purchase price is based upon the relative fair value of each component of the property. Although independent appraisals may be used to assist in the determination of fair value, in many cases these values will be based upon management’s assessment of each property, the selling prices of comparable properties and the discounted value of cash flows from the asset.

The fair values of above market and below market in-place leases will be recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) an estimate of fair market lease rates for the corresponding in-place leases measured over a period equal to the non-cancelable term of the lease including any bargain renewal periods. The above market and below market lease values will be capitalized as intangible lease assets or liabilities. Above market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases. Below market lease values will be amortized as an adjustment of rental income over the remaining term of the respective leases, including any bargain renewal periods. If a lease were to be terminated prior to its stated expiration, all unamortized amounts of above market and below market in-place lease values relating to that lease would be recorded as an adjustment to rental income.

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 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 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.

14

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

Carrying Value of Properties

Properties are carried at original cost, less accumulated depreciation and amortization. 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-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’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.

Allocation of Expenses

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.

Factors Which May Influence Results of Operations

The Company is not aware of any material trends or uncertainties, other than national economic conditions affecting real estate generally, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues and investment property value. However, due to the recent outbreak of the coronavirus (COVID-19) in the U.S. and globally, our tenants and operating partners may be impacted. See Note 8 on COVID-19 effect on our operations. The impact of COVID-19 on our future results could still be significant and will largely depend on continuing developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, the success of actions taken to contain or treat COVID-19, and reactions by consumers, companies, governmental entities and capital markets.

Results of Operations

For the nine months ended September 30, 2021 and 2020, the Company recognized rental income of $499,069 and $497,193, respectively. In 2021, rental income increased due to a rent increase on one property. Based on the scheduled rent for the properties owned as of October 31, 2021, the Company expects to recognize rental income of approximately $665,000 in 2021.

15

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

For the nine months ended September 30, 2021 and 2020, the Company incurred LLC administration expenses from affiliated parties of $99,605 and $81,936, 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 $68,811 and $78,932, 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.

The Company owns a 40% interest in a former Sports Authority store in Wichita, Kansas. On March 2, 2016, the tenant, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2020, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. On March 23, 2021, a motion to dismiss the bankruptcy case was issued by a federal judge to The Sports Authority, Inc., the Company will therefore not be receiving any of the past due rent. The owners listed the property for lease with a real estate broker in the Wichita area. While the property was vacant, the Company was responsible for its 40% share of real estate taxes and other costs associated with maintaining the property.

On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property. The tenant operates a Biomat USA Plasma Center in the space. The Company’s 40% share of annual rent, which commenced on June 18, 2018, is $37,071. Biomat agreed to pay for the costs to divide the building into two separate spaces, the costs of tenant improvements to remodel the Biomat space and 28% of the cost to replace the roof.

On August 27, 2019, the Company entered into a lease agreement with a primary term of 10 years with BigTime Fun Center, LLC as a replacement tenant for 57% of the square footage of the property. The tenant will operate an indoor sports entertainment center in the space. The Company’s 40% share of annual rent, which was to commence on February 23, 2020, is $78,000. As part of the agreement, the Company was to pay a tenant improvement allowance of $64,000 when certain conditions are met by the tenant. Due to ongoing difficulties due to the COVID-19 Pandemic the Company was negotiating a rent commencement date of April 1, 2021. As a part of the negotiations the tenant improvement allowance was to be replaced with a ten month rent abatement starting April 1, 2021. Additionally, this agreement would forebear rent and additional charges for the period from February 23, 2020 to March 31, 2021. In September 2019, the Company paid $32,760 to a real estate broker for its 40% share of the lease commission due as part of the lease transaction. This amount was capitalized and will be amortized over the term of the lease. On January 22, 2021 the owner of Big Time Fun Center, LLC informed the Company that it does not intend to open the Wichita property. As a result of the tenant informing the Company of their intention not to open, the full amount of the lease commission was amortized in the fourth quarter of 2020. The property is currently being marketed for lease with a real estate broker in the Wichita area.

16

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

The Company owned a 55% interest in an Advance Auto Parts store in Middletown, Ohio. The remaining interest in the property was owned by an affiliate of the Company. On July 31, 2019, the lease term ended, and the tenant returned possession of the property to the owners. While the property was vacant, the Company was responsible for its 55% share of real estate taxes and other costs associated with maintaining the property. The owners have listed the property for sale or lease with a real estate broker in the Middletown area. The annual rent from this property represented approximately 11% of the total annual rent of the Company’s property portfolio. The loss of rent and increased expenses related to this property will decrease the Company’s cash flow. However, at this time, the Company does not anticipate the need to further reduce its regular quarterly cash distribution rate.

Based on its long-lived asset valuation analysis, the Company determined the Advance Auto store was impaired. Based on its long-lived asset valuation analysis in the fourth quarter of 2020, the Company recognized an additional real estate impairment of $78,376 to decrease the carrying value to the estimated fair value of $82,500. The charge was recorded against the cost of the land and building.

For the nine months ended September 30, 2021 and 2020, the Company recognized interest income of $866 and $3,105, respectively.

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 nine months ended September 30, 2021, the Company's cash balances decreased $131,439 as a result of distributions paid to the Members and cash used to repurchase Units in excess of cash generated from operating activities, which was partially offset by cash generated from the sale of property.

Net cash provided by operating activities increased from $291,319 in 2020 to $366,055 in 2021 as a result of net timing differences in the collection of payments from the tenants and the payment of expenses, which was partially offset by a decrease in total rental and interest income in 2021 and an increase in LLC administration 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 nine months ended September 30, 2021, the Company generated cash flow from the sale of real estate of $99,069.

17

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

In April 2021, the Company entered into an agreement to sell its 55% interest in the Advance Auto Parts store in Middletown, Ohio to an unrelated third party. On June 29, 2021, the sale closed with the Company receiving net proceeds of $99,069, which resulted in a gain of $18,606. At the time of sale, the cost and related accumulated depreciation and amortization was $576,598 and $496,135, respectively.

In November 2021, the Company entered into an agreement to sell its Dollar Tree store in West Point, Mississippi to an unrelated third party. The sale is subject to contingencies and may not be completed. If the sale is completed, the Company expects to receive net proceeds of approximately $1,591,000, which will result in a net gain of approximately $332,000.

The Company's primary use of cash flow, other than investment in real estate, is distribution payments to Members and cash used to repurchase Units. 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. The Company may repurchase tendered Units on April 1st and October 1st of each year subject to limitations.

For the nine months ended September 30, 2021 and 2020, the Company declared distributions of $280,205 and $283,297, respectively. Pursuant to the Operating Agreement, distributions of Net Cash Flow were allocated 97% to the Limited Members and 3% to the Managing Members. Distributions of Net Proceeds of Sale were allocated 99% to the Limited Members and 1% to the Managing Members. The Limited Members were allocated distributions of $271,799 and $274,798 and the Managing Members were allocated distributions of $8,406 and $8,499 for the periods, respectively.

The Company may repurchase 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.

For the nine months ended September 30, 2021, the Company repurchased a total of 59,562.8 Units for $305,367 from eight Limited Members in accordance with the Operating Agreement. The Company acquired these Units using net sales proceeds. For the nine months ended September 30, 2020, the Company did not repurchase any Units from the Limited Members. The repurchases increase the remaining Limited Members’ ownership interest in the Company. As a result of these repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of $9,444 in 2021.

The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Company obligations on both a short-term and long-term basis.

18

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

Off-Balance Sheet Arrangements

As of September 30, 2021 and December 31, 2020, the Company 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.

ITEM 3. QUANTITATIVE & 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”)). 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.

19

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES & 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 may be repurchased on April 1^st and October 1^st, 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 4. MINE SAFETY DISCLOSURES.

Not Applicable.

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.

20

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, 2021	AEI Income & Growth Fund 26 LLC
	By:	AEI Fund Management XXI, Inc.
	Its:	Managing Member
	By:	/s/ Marni J Nygard
		Marni J. Nygard
		President
		(Principal Executive Officer)
	By:	/s/ Keith E Petersen
		Keith E. Petersen
		Chief Financial Officer
		(Principal Accounting Officer)

21

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Marni J. Nygard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AEI Income & Growth Fund 26 LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 10, 2021	/s/ Marni J Nygard
	Marni J. Nygard, President
	AEI Fund Management XXI, Inc.
	Managing General Partner

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Keith E. Petersen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AEI Income & Growth Fund 26 LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 10, 2021	/s/ Keith E Petersen
	Keith E. Petersen, Chief Financial Officer
	AEI Fund Management XXI, Inc.
	Managing General Partner

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AEI Income & Growth Fund 26 LLC (the “Company”) on Form 10-Q for the period ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Marni J. Nygard, President of AEI Fund Management XXI, Inc., the Managing Member of the Company, and Keith E. Petersen, Chief Financial Officer of AEI Fund Management XXI, Inc., each certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/ Marni J Nygard

Marni J. Nygard, President

AEI Fund Management XXI, Inc.

Managing General Partner

November 10, 2021

 /s/ Keith E Petersen

Keith E. Petersen, Chief Financial Officer

AEI Fund Management XXI, Inc.

Managing General Partner

November 10, 2021

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2021 shares
Document Information Line Items
Entity Registrant Name	AEI INCOME & GROWTH FUND 26 LLC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	1,678,443.2
Amendment Flag	false
Entity Central Index Key	0001326321
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Entity File Number	000-51823
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	41-2173048
Entity Address, Address Line One	30 East 7th Street, Suite 1300
Entity Address, City or Town	St. Paul
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55101
City Area Code	651
Local Phone Number	227-7333
Entity Information, Former Legal or Registered Name	Not Applicable
No Trading Symbol Flag	true
Security Exchange Name	NONE
Title of 12(g) Security	Limited Liability Company Units
Entity Interactive Data Current	Yes
Document Transition Report	false

XML

Balance Sheet - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Current Assets:
Cash	$ 1,223,788	$ 1,355,227
Rent Receivable	6,453	17,747
Total Current Assets	1,230,241	1,372,974
Real Estate Investments:
Land	2,829,432	2,848,286
Buildings	7,156,951	7,714,695
Acquired Intangible Lease Assets	808,152	808,152
Real Estate Held for Investment, at cost	10,794,535	11,371,133
Accumulated Depreciation and Amortization	(3,436,920)	(3,651,340)
Real Estate Held for Investment, Net	7,357,615	7,719,793
Long-Term Rent Receivable	0	1,613
Total Assets	8,587,856	9,094,380
Current Liabilities:
Payable to AEI Fund Management, Inc.	92,088	53,953
Distributions Payable	92,886	94,433
Total Current Liabilities	184,974	148,386
Long-Term Liabilities:
Acquired Below-Market Lease Intangibles, Net	118,319	140,507
Members’ Equity:
Managing Members	(108,274)	(92,647)
Limited Members – 10,000,000 Units authorized; 1,678,443.2 and 1,738,006.0 Units issued and outstanding as of 9/30/2021 and 12/31/2020	8,392,837	8,898,134
Total Members’ Equity	8,284,563	8,805,487
Total Liabilities and Members’ Equity	$ 8,587,856	$ 9,094,380

XML

Balance Sheet (Parentheticals) - Limited Partner [Member] - shares	Sep. 30, 2021	Dec. 31, 2020
Limited Members, units authorized	10,000,000	10,000,000
Limited Members, units issued	1,678,443.2	1,738,006
Limited Members, units outstanding	1,678,443.2	1,738,006

XML

Statement of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Statement [Abstract]
Rental Income	$ 166,502	$ 165,870	$ 499,069	$ 497,193
Expenses:
LLC Administration – Affiliates	35,233	27,189	99,605	81,936
LLC Administration and Property Management – Unrelated Parties	17,604	21,279	68,811	78,932
Depreciation and Amortization	91,332	95,130	276,033	284,844
Total Expenses	144,169	143,598	444,449	445,712
Operating Income	22,333	22,272	54,620	51,481
Other Income:
Gain on Sale of Real Estate	0	0	18,606	0
Interest Income	285	328	866	3,105
Total Other Income	285	328	19,472	3,105
Net Income	22,618	22,600	74,092	54,586
Net Income Allocated:
Managing Members	679	678	2,223	1,638
Limited Members	$ 21,939	$ 21,922	$ 71,869	$ 52,948
Net Income per LLC Unit (in Dollars per share)	$ 0.01	$ 0.01	$ 0.04	$ 0.03
Weighted Average Units Outstanding – Basic and Diluted (in Shares)	1,678,443	1,738,006	1,698,297	1,738,006

XML

Statement of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash Flows from Operating Activities:
Net Income (Loss)	$ 74,092	$ 54,586
Adjustments to Reconcile Net Income To Net Cash Provided by Operating Activities:
Depreciation and Amortization	259,527	268,338
Gain on Sale of Real Estate	(18,606)	0
(Increase) Decrease in Rent Receivable	12,907	(19,360)
Increase (Decrease) in Payable to AEI Fund Management, Inc.	38,135	(11,825)
Increase (Decrease) in Unearned Rent	0	(420)
Total Adjustments	291,963	236,733
Net Cash Provided By (Used For) Operating Activities	366,055	291,319
Cash Flows from Investing Activities:
Proceeds from Sale of Real Estate	99,069	0
Cash Flows from Financing Activities:
Distributions Paid to Members	(281,752)	(283,298)
Repurchase of LLC Units	(314,811)	0
Net Cash Provided By (Used For) Investing Activities	(596,563)	(283,298)
Net Increase (Decrease) in Cash	(131,439)	8,021
Cash, beginning of period	1,355,227	1,331,120
Cash, end of period	$ 1,223,788	$ 1,339,141

XML

Statement of Changes in Members' Equity - USD ($)	General Partner [Member]	Limited Partner [Member]	Total
Balance at Dec. 31, 2019	$ (80,397)	$ 9,294,214	$ 9,213,817
Balance (in Shares) at Dec. 31, 2019		1,738,006
Balance at Mar. 31, 2020	(83,092)	$ 9,207,081	9,123,989
Balance (in Shares) at Mar. 31, 2020		1,738,006
Distributions Declared	(2,833)	$ (91,599)	(94,432)
Net Income	138	4,466	4,604
Balance at Dec. 31, 2019	(80,397)	$ 9,294,214	9,213,817
Balance (in Shares) at Dec. 31, 2019		1,738,006
Balance at Sep. 30, 2020	(87,258)	$ 9,072,364	8,985,106
Balance (in Shares) at Sep. 30, 2020		1,738,006
Distributions Declared	(8,499)	$ (274,798)	(283,297)
Net Income			54,586
Balance at Mar. 31, 2020	(83,092)	$ 9,207,081	9,123,989
Balance (in Shares) at Mar. 31, 2020		1,738,006
Balance at Jun. 30, 2020	(85,103)	$ 9,142,042	9,056,939
Balance (in Shares) at Jun. 30, 2020		1,738,006
Distributions Declared	(2,833)	$ (91,599)	(94,432)
Net Income	822	26,560	27,382
Balance at Sep. 30, 2020	(87,258)	$ 9,072,364	8,985,106
Balance (in Shares) at Sep. 30, 2020		1,738,006
Distributions Declared	(2,833)	$ (91,600)	(94,433)
Net Income	678	21,922	22,600
Balance at Dec. 31, 2020	(92,647)	$ 8,898,134	8,805,487
Balance (in Shares) at Dec. 31, 2020		1,738,006
Balance at Mar. 31, 2021	(94,998)	$ 8,822,107	8,727,109
Balance (in Shares) at Mar. 31, 2021		1,738,006
Distributions Declared	(2,833)	$ (91,600)	(94,433)
Net Income	482	15,573	16,055
Balance at Dec. 31, 2020	(92,647)	$ 8,898,134	8,805,487
Balance (in Shares) at Dec. 31, 2020		1,738,006
Balance at Sep. 30, 2021	(108,274)	$ 8,392,837	8,284,563
Balance (in Shares) at Sep. 30, 2021		1,678,443.2
Distributions Declared	(8,406)	$ (271,799)	(280,205)
Repurchase of LLC Units	(9,444)	$ (305,367)
Units Repurchased (in Shares)		(59,562.8)
Net Income			74,092
Balance at Mar. 31, 2021	(94,998)	$ 8,822,107	8,727,109
Balance (in Shares) at Mar. 31, 2021		1,738,006
Balance at Jun. 30, 2021	(106,166)	$ 8,460,997	8,354,831
Balance (in Shares) at Jun. 30, 2021		1,678,443.2
Distributions Declared	(2,786)	$ (90,100)	(92,886)
Repurchase of LLC Units	(9,444)	$ (305,367)	(314,811)
Units Repurchased (in Shares)		(59,562.8)
Net Income	1,062	$ 34,357	35,419
Balance at Sep. 30, 2021	(108,274)	$ 8,392,837	8,284,563
Balance (in Shares) at Sep. 30, 2021		1,678,443.2
Distributions Declared	(2,787)	$ (90,099)	(92,886)
Net Income	$ 679	$ 21,939	$ 22,618

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Basis of Accounting

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Basis of Accounting [Text Block]

(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 United States Generally Accepted Accounting Principles (US GAAP) 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 10K.

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Organization

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

(2)  Organization –

AEI Income & Growth Fund 26 LLC (“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 previous Chief Executive Officer and sole director of AFM, served as the Special Managing Member until his withdrawal date effective March 31, 2020. AFM is a wholly owned subsidiary of AEI Capital Corporation of which the Estate of Robert Johnson and Patricia Johnson, the wife of the deceased, own a majority interest. AEI Fund Management, Inc. (“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 ended. 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.

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.

In August 2021, the Managing Member mailed a Consent Statement (Proxy) seeking the consent of the Limited Members, as required by Section 6.1 of the Operating Agreement, to initiate the final disposition, liquidation and distribution of all of the Company’s properties and assets within the next 12 to 24 months. On October 12, 2021, the proposal was approved with a majority of Units voting in favor of the proposal. As a result, the Managing Member is proceeding with the planned liquidation of the Company.

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Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

(3)  Recently Issued Accounting Pronouncements –

In April 2020, the Financial Accounting Standards Board (FASB) issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under current lease guidance. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance.

During the year ended December 31, 2020, the Company provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under lease guidance if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease.

Substantially, all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its rent receivables as tenant payments accrue and continues to recognize rental income. During the year ended December 31, 2020, the Company has entered into lease modifications that deferred $19,360, which was recognized as rental income for those deferred months in 2020. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021.

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Real Estate Investments

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

(4)  Real Estate Investments –

The Company owns a 40% interest in a former Sports Authority store in Wichita, Kansas. On March 2, 2016, the tenant, TSA Stores, Inc., and its parent company, The Sports Authority, Inc., the guarantor of the lease, filed for Chapter 11 bankruptcy reorganization. In June 2016, the tenant filed a motion with the bankruptcy court to reject the lease for this store effective June 30, 2016, at which time the tenant returned possession of the property to the owners. As of December 31, 2020, the tenant owed $19,366 of past due rent, which was not accrued for financial reporting purposes. On March 23, 2021, a motion to dismiss the bankruptcy case was issued by a federal judge to The Sports Authority, Inc., the Company will therefore not be receiving any of the past due rent. The owners listed the property for lease with a real estate broker in the Wichita area. While the property was vacant, the Company was responsible for its 40% share of real estate taxes and other costs associated with maintaining the property.

On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property. The tenant operates a Biomat USA Plasma Center in the space. The Company’s 40% share of annual rent, which commenced on June 18, 2018, is $37,071. Biomat agreed to pay for the costs to divide the building into two separate spaces, the costs of tenant improvements to remodel the Biomat space and 28% of the cost to replace the roof.

On August 27, 2019, the Company entered into a lease agreement with a primary term of 10 years with BigTime Fun Center, LLC as a replacement tenant for 57% of the square footage of the property. The tenant will operate an indoor sports entertainment center in the space. The Company’s 40% share of annual rent, which was to commence on February 23, 2020, is $78,000. As part of the agreement, the Company was to pay a tenant improvement allowance of $64,000 when certain conditions are met by the tenant. Due to ongoing difficulties due to the COVID-19 Pandemic the Company was negotiating a rent commencement date of April 1, 2021. As a part of the negotiations the tenant improvement allowance was to be replaced with a ten month rent abatement starting April 1, 2021. Additionally, this agreement would forebear rent and additional charges for the period from February 23, 2020 to March 31, 2021. In September 2019, the Company paid $32,760 to a real estate broker for its 40% share of the lease commission due as part of the lease transaction. This amount was capitalized and will be amortized over the term of the lease. On January 22, 2021 the owner of Big Time Fun Center, LLC informed the Company that it does not intend to open the Wichita property. As a result of the tenant informing the Company of their intention not to open, the full amount of the lease commission was amortized in the fourth quarter of 2020. The property is currently being marketed for lease with a real estate broker in the Wichita area.

The Company owned a 55% interest in an Advance Auto Parts store in Middletown, Ohio. The remaining interest in the property was owned by an affiliate of the Company. On July 31, 2019, the lease term ended, and the tenant returned possession of the property to the owners. While the property was vacant, the Company was responsible for its 55% share of real estate taxes and other costs associated with maintaining the property. The owners have listed the property for sale or lease with a real estate broker in the Middletown area. The annual rent from this property represented approximately 11% of the total annual rent of the Company’s property portfolio. The loss of rent and increased expenses related to this property will decrease the Company’s cash flow.

Based on its long-lived asset valuation analysis, the Company determined the Advance Auto store was impaired. Based on its long-lived asset valuation analysis in the fourth quarter of 2020, the Company recognized a real estate impairment of $78,376 to decrease the carrying value to the estimated fair value of $82,500. The charge was recorded against the cost of the land and building.

In April 2021, the Company entered into an agreement to sell its 55% interest in the Advance Auto Parts store in Middletown, Ohio to an unrelated third party. On June 29, 2021, the sale closed with the Company receiving net proceeds of $99,069, which resulted in a gain of $18,606. At the time of sale, the cost and related accumulated depreciation and amortization was $576,598 and $496,135, respectively.

In November 2021, the Company entered into an agreement to sell its Dollar Tree store in West Point, Mississippi to an unrelated third party. The sale is subject to contingencies and may not be completed. If the sale is completed, the Company expects to receive net proceeds of approximately $1,591,000, which will result in a net gain of approximately $332,000.

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Payable to AEI Fund Management, Inc.

9 Months Ended

Sep. 30, 2021

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

(5) 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.

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Members' Equity

9 Months Ended

Sep. 30, 2021

Disclosure Text Block Supplement [Abstract]

Members' Equity Notes Disclosure [Text Block]

(6)  Members’ Equity –

For the nine months ended September 30, 2021 and 2020, the Company declared distributions of $280,205 and $283,297, respectively. The Limited Members were allocated distributions of $271,799 and $274,798 and the Managing Members were allocated distributions of $8,406 and $8,499 for the periods, respectively. The Limited Members' distributions represented $0.16 per LLC Unit outstanding using 1,698,297 and 1,738,006 weighted average Units in 2021 and 2020, respectively. The distributions represented $0.04 and $0.03 per Unit of Net Income and $0.12 and $0.13 per Unit of return of contributed capital in 2021 and 2020, respectively.

For the nine months ended September 30, 2021, the Company repurchased a total of 59,562.8 Units for $305,367 from eight Limited Members in accordance with the Operating Agreement. The Company acquired these Units using net sales proceeds. For the nine months ended September 30, 2020, the Company did not repurchase any Units from the Limited Members. The repurchases increase the remaining Limited Members’ ownership interest in the Company. As a result of these repurchases and pursuant to the Operating Agreement, the Managing Members received distributions of $9,444 in 2021.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

(7) Fair Value Measurements –

Fair value, as defined by US GAAP, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. US GAAP establishes a hierarchy in determining the fair value of an asset or liability. The fair value hierarchy has three levels of inputs, both observable and unobservable. US GAAP requires the utilization of the lowest possible level of input to determine fair value. Level 1 inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 inputs are market data, other than Level 1 inputs, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 inputs are unobservable and corroborated by little or no market data.

At September 30, 2021 and December 31, 2020, the Company had no financial assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure. The Company had the following nonfinancial assets measured on a nonrecurring basis that were recorded at fair value during 2020.

At December 31, 2020, the Advance Auto store in Middletown, Ohio was written down to its estimated fair value of $82,500 after completing our long-lived asset valuation analysis. The resulting impairment charge of $78,376 was included in earnings for the fourth quarter of 2020. The fair value of the property was based upon comparable sales of similar properties, which are considered Level 2 inputs in the valuation hierarchy.

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COVID-19 Outbreak

9 Months Ended

Sep. 30, 2021

Coronavirus Outbreak Policy [Abstract]

CoronavirusOutbreakPolicyTextBlock

(8)  COVID-19 Outbreak –

During the first quarter of 2020, there was a global outbreak of COVID-19 which continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving, and as cases of the virus have continued to be identified in additional countries, many countries have reacted by instituting quarantines, placing restrictions on travel, and limiting hours of operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as retail, restaurants and transportation. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID19 presents material uncertainty and risk with respect to the Company’s performance and financial results, such as the potential negative impact to the tenants of its properties, the potential closure of certain of its properties, increased costs of operations, decrease in values of its properties, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Up to the date of this filing, the Company has entered into a rent deferral agreement with one tenant of the six properties owned by the Company. In June 2020, the Company entered into an agreement with the tenant of the Zales store in Enid, Oklahoma to defer base rent in April and May 2020. The tenant started paying the deferred amounts in twelve equal monthly installments beginning on February 1, 2021.

The Company has elected not to account for these deferrals of rent as a lease modification under COVID-19 guidance issued by the FASB. Deferred rent of $19,360 was recognized as rental income during the year ended December 31, 2020 and a corresponding rent receivable was recorded. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021. The Company continues to work closely with tenants to determine the best course of action to meet the tenants short-term rental needs during these unprecedented times.

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2021

Accounting Policies [Abstract]

Distribution Policy, Members or Limited Partners, Description

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. 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.

Key Provisions of Operating or Partnership Agreement, Description

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.

New Accounting Pronouncement or Change in Accounting Principle, Description

In April 2020, the Financial Accounting Standards Board (FASB) issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant or if a lease concession was under the enforceable rights and obligations within the existing lease agreement. The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under current lease guidance. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance. During the year ended December 31, 2020, the Company provided lease concessions to certain tenants in response to the impact of COVID-19, in the form of rent deferrals. The Company has made an election to account for such lease concessions consistent with how those concessions would be accounted for under lease guidance if enforceable rights and obligations for those concessions had already existed in the leases. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights as lessor, including concessions that result in the total payments required by the modified lease being substantially the same as or less than total payments required by the original lease.   Substantially, all of the Company’s concessions to date provide for a deferral of payments with no substantive changes to the consideration in the original lease. These deferrals affect the timing, but not the amount, of the lease payments. The Company is accounting for these deferrals as if no changes to the lease were made. Under this accounting, the Company increases its rent receivables as tenant payments accrue and continues to recognize rental income. During the year ended December 31, 2020, the Company has entered into lease modifications that deferred $19,360, which was recognized as rental income for those deferred months in 2020. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021.

CoronavirusOutbreakTextBlock

During the first quarter of 2020, there was a global outbreak of COVID-19 which continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving, and as cases of the virus have continued to be identified in additional countries, many countries have reacted by instituting quarantines, placing restrictions on travel, and limiting hours of operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting a number of industries, such as retail, restaurants and transportation. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19. Nevertheless, COVID19 presents material uncertainty and risk with respect to the Company’s performance and financial results, such as the potential negative impact to the tenants of its properties, the potential closure of certain of its properties, increased costs of operations, decrease in values of its properties, changes in law and/or regulation, and uncertainty regarding government and regulatory policy. Up to the date of this filing, the Company has entered into a rent deferral agreement with one tenant of the six properties owned by the Company. In June 2020, the Company entered into an agreement with the tenant of the Zales store in Enid, Oklahoma to defer base rent in April and May 2020. The tenant started paying the deferred amounts in twelve equal monthly installments beginning on February 1, 2021.

The Company has elected not to account for these deferrals of rent as a lease modification under COVID-19 guidance issued by the FASB. Deferred rent of $19,360 was recognized as rental income during the year ended December 31, 2020 and a corresponding rent receivable was recorded. The rent receivable related to these rental deferrals is $6,453 as of September 30, 2021. The Company continues to work closely with tenants to determine the best course of action to meet the tenants short-term rental needs during these unprecedented times.

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Organization (Details) - USD ($)	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Oct. 19, 2007	Apr. 03, 2006
Limited Partner [Member]
Organization (Details) [Line Items]
Capital Units, Value										$ 10
Limited Partners' Capital Account, Units Outstanding (in Shares)	1,678,443.2	1,678,443.2	1,738,006	1,738,006	1,738,006	1,738,006	1,738,006	1,738,006	1,832,736	150,000
Limited Partners' Contributed Capital									$ 18,327,360	$ 1,500,000
General Partner [Member]
Organization (Details) [Line Items]
General Partners' Contributed Capital									$ 1,000

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Recently Issued Accounting Pronouncements (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Deferred Rent Receivables, Net	$ 6,453	$ 19,360

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Real Estate Investments (Details) - USD ($)					3 Months Ended	12 Months Ended
	Jun. 29, 2021	Sep. 01, 2019	Aug. 27, 2019	Sep. 21, 2017	Dec. 31, 2020	Feb. 22, 2021	Jun. 17, 2019
Biomat USA Plasma Center Wichita KS
Real Estate Investments (Details) [Line Items]
Average Lease Term				On September 21, 2017, the Company entered into a lease agreement with a primary term of 10 years with Biomat USA, Inc. (“Biomat”) as a replacement tenant for 28% of the square footage of the property.
Revenue from Contract with Customer, Excluding Assessed Tax							$ 37,071
BigTime Fun Wichita KS
Real Estate Investments (Details) [Line Items]
Average Lease Term			On August 27, 2019, the Company entered into a lease agreement with a primary term of 10 years with BigTime Fun Center, LLC as a replacement tenant for 57% of the square footage of the property.
Revenue from Contract with Customer, Excluding Assessed Tax						$ 78,000
Payments for Tenant Improvements			$ 64,000
Payments for Lease Commissions		$ 32,760
Advance Auto Middletown OH
Real Estate Investments (Details) [Line Items]
Impairment of Real Estate					$ 78,376
Property, Plant, and Equipment, Fair Value Disclosure					$ 82,500
Disposal Date	Jun. 29, 2021
Proceeds from Sale of Real Estate	$ 99,069
Gain (Loss) on Disposition of Assets	18,606
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate, Cost of Investment in Real Estate Sold	576,598
SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate, Accumulated Depreciation	$ 496,135

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Members' Equity (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Members' Equity (Details) [Line Items]
Distribution Made to Limited Partner, Cash Distributions Declared	$ 92,886	$ 92,886	$ 94,433	$ 94,433	$ 94,432	$ 94,432	$ 280,205	$ 283,297
Partners' Capital Account, Redemptions		314,811
Limited Partner [Member]
Members' Equity (Details) [Line Items]
Distribution Made to Limited Partner, Cash Distributions Declared	90,099	$ 90,100	91,600	91,600	91,599	91,599	$ 271,799	$ 274,798
Distribution Made to Limited Partner, Distributions Declared, Per Unit (in Dollars per share)							$ 0.16	$ 0.16
Weighted Average Limited Partnership Units Outstanding, Basic (in Shares)							1,698,297	1,738,006
DistributionsPerUnitOfNetIncome (in Dollars per share)							$ 0.04	$ 0.03
DistributionsPerUnitOfReturnOfCapital (in Dollars per share)							$ 0.12	$ 0.13
Partners' Capital Account, Units, Redeemed (in Shares)		59,562.8					59,562.8
Partners' Capital Account, Redemptions		$ 305,367					$ 305,367
General Partner [Member]
Members' Equity (Details) [Line Items]
Distribution Made to Limited Partner, Cash Distributions Declared	$ 2,787	2,786	$ 2,833	$ 2,833	$ 2,833	$ 2,833	8,406	$ 8,499
Partners' Capital Account, Redemptions		$ 9,444					$ 9,444

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Fair Value Measurements (Details) - Advance Auto Middletown OH	3 Months Ended
	Dec. 31, 2020 USD ($)
Fair Value Measurements (Details) [Line Items]
Property, Plant, and Equipment, Fair Value Disclosure	$ 82,500
Impairment of Real Estate	$ 78,376

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COVID-19 Outbreak (Details) - USD ($)	Sep. 30, 2021	Dec. 31, 2020
Coronavirus Outbreak Policy [Abstract]
Deferred Rent Receivables, Net	$ 6,453	$ 19,360