10-Q 1 q183-10.txt 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, 2010 Commission File Number: 000-18289 AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) State of Minnesota 41-1622463 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101 (Address of principal executive offices) (651) 227-7333 (Registrant's telephone number) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [ ] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP INDEX Part I - Financial Information Item 1. Financial Statements (unaudited): Statement of Net Assets Available for Liquidation as of September 30, 2010 and December 31, 2009 Statement of Liquidating Activities for the Periods ended September 30, 2010 and 2009 Notes to Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 5. Other Information Item 6. Exhibits Signatures AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP STATEMENT OF NET ASSETS AVAILABLE FOR LIQUIDATION SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 2010 2009 ASSETS: Cash $ 727,290 $ 850,895 Investments in Real Estate 620,600 648,600 ----------- ----------- Total Assets 1,347,890 1,499,495 ----------- ----------- LIABILITIES: Payable to AEI Fund Management, Inc. 14,362 11,739 Distributions Payable 42,929 42,929 Unearned Rent 0 4,494 ----------- ----------- Total Liabilities 57,291 59,162 ----------- ----------- NET ASSETS (PARTNERS' CAPITAL) IN LIQUIDATION, including 18,957 Limited Partnership Units outstanding $ 1,290,599 $ 1,440,333 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP STATEMENT OF LIQUIDATING ACTIVITIES FOR THE PERIODS ENDED SEPTEMBER 30 Three Months Ended Nine Months Ended 9/30/10 9/30/09 9/30/10 9/30/09 SOURCES OF ADDITIONAL CASH: Rent $ 18,611 $ 24,505 $ 51,256 $ 79,678 Interest Income 1,846 1,850 5,777 5,994 ---------- ---------- ---------- ---------- Total Sources of Additional Cash 20,457 26,355 57,033 85,672 ---------- ---------- ---------- ---------- USES OF ADDITIONAL CASH: Partnership Administration - Affiliates 1,165 13,068 27,033 43,175 Partnership Administration and Property Management - Unrelated Parties 3,087 1,931 24,169 12,824 Expenses Related to Sale of Real Estate 648 0 648 0 Distributions Paid to Partners 42,930 42,930 128,788 137,371 ---------- ---------- ---------- ---------- Total Uses of Additional Cash 47,830 57,929 180,638 193,370 ---------- ---------- ---------- ---------- DECREASE IN NET ASSETS IN LIQUIDATION BEFORE ADJUSTMENTS (27,373) (31,574) (123,605) (107,698) ---------- ---------- ---------- ---------- ADJUSTMENTS OF ESTIMATED VALUES: Change in Net Realizable values of: Real Estate 0 0 (28,000) (128,000) Payable to AEI Fund Management, Inc. (10,285) (481) (2,623) (4,826) Distributions Payable 0 0 0 8,583 Unearned Rent 0 2,092 4,494 0 ---------- ---------- ---------- ---------- Total Adjustment of Estimated Values (10,285) 1,611 (26,129) (124,243) ---------- ---------- ---------- ---------- DECREASE IN NET ASSETS IN LIQUIDATION (37,658) (29,963) (149,734) (231,941) BEGINNING NET ASSETS IN LIQUIDATION 1,328,257 1,649,095 1,440,333 1,851,073 ---------- ---------- ---------- ---------- ENDING NET ASSETS IN LIQUIDATION $1,290,599 $1,619,132 $1,290,599 $1,619,132 ========== ========== ========== ========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2010 (1) The condensed statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements. The adjustments made to these condensed statements consist only of normal recurring adjustments. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the registrant's latest annual report on Form 10-K. (2) Organization - AEI Real Estate Fund XVIII Limited Partnership ("Partnership") was formed to acquire and lease commercial properties to operating tenants. The Partnership's operations are managed by AEI Fund Management XVIII, Inc. ("AFM"), the Managing General Partner. Robert P. Johnson, the President and sole director of AFM, serves as the Individual General Partner. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AEI Fund Management, Inc. ("AEI"), an affiliate of AFM, performs the administrative and operating functions for the Partnership. The terms of the Partnership offering called for a subscription price of $1,000 per Limited Partnership Unit, payable on acceptance of the offer. The Partnership commenced operations on February 15, 1989 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. The offering terminated December 4, 1990 when the extended offering period expired. The Partnership received subscriptions for 22,783.05 Limited Partnership Units. Under the terms of the Limited Partnership Agreement, the Limited Partners and General Partners contributed funds of $22,783,050, and $1,000, respectively. During operations, any Net Cash Flow, as defined, which the General Partners determine to distribute will be distributed 90% to the Limited Partners and 10% to the General Partners; provided, however, that such distributions to the General Partners will be subordinated to the Limited Partners first receiving an annual, noncumulative distribution of Net Cash Flow equal to 10% of their Adjusted Capital Contribution, as defined, and, provided further, that in no event will the General Partners receive less than 1% of such Net Cash Flow per annum. Distributions to Limited Partners will be made pro rata by Units. AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued) Any Net Proceeds of Sale as defined, from the sale or financing of properties which the General Partners determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Partners and l% to the General Partners until the Limited Partners receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 6% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed from Net Cash Flow; (ii) next, 99% to the Limited Partners and 1% to the General Partners until the Limited Partners receive an amount equal to 14% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed; (iii) next, to the General Partners until cumulative distributions to the General Partners under Items (ii) and (iii) equal 15% of cumulative distributions to all Partners under Items (ii) and (iii). Any remaining balance will be distributed 85% to the Limited Partners and 15% to the General Partners. Distributions to the Limited Partners 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 first in the same ratio in which, and to the extent, Net Cash Flow is distributed to the Partners for such year. Any additional profits will be allocated 90% to the Limited Partners and 10% to the General Partners. In the event no Net Cash Flow is distributed to the Limited Partners, 90% of each item of income, gain or credit for each respective year shall be allocated to the Limited Partners, and 10% of each such item shall be allocated to the General Partners. Net losses from operations will be allocated 98% to the Limited Partners and 2% to the General Partners. For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Partnership Agreement as follows: (i) first, to those partners with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Partners and 1% to the General Partners until the aggregate balance in the Limited Partners' capital accounts equals the sum of the Limited Partners' Adjusted Capital Contributions plus an amount equal to 14% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously allocated; (iii) third, to the General Partners until cumulative allocations to the General Partners equal 15% of cumulative allocations. Any remaining balance will be allocated 85% to the Limited Partners and 15% to the General Partners. Losses will be allocated 98% to the Limited Partners and 2% to the General Partners. The General Partners are not required to currently fund a deficit capital balance. Upon liquidation of the Partnership or withdrawal by a General Partner, the General Partners will contribute to the Partnership an amount equal to the lesser of the deficit balances in their capital accounts or 1% of total Limited Partners' and General Partners' capital contributions. AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued) In January 2009, the Managing General Partner solicited by mail a proxy statement seeking the consent of the Limited Partners, as required by Section 6.1 of the Partnership Agreement, to initiate the final disposition, liquidation and distribution of all of the Partnership's properties and assets within the next year. On February 24, 2009, the proposal was approved with a majority of Units voted in favor of the proposal. As a result, the Managing General Partner is proceeding with the planned liquidation of the Partnership. At this time, the Partnership anticipates that it will sell its remaining property and liquidate prior to December 31, 2010. Financial Statement Presentation Because liquidation was anticipated, the Partnership changed its basis of accounting after September 30, 2007, from the going concern basis to the liquidation basis. Effective October 1, 2007, the Partnership measures its assets and liabilities at the amounts of cash expected in liquidation and reports changes in estimates when they are known. The accounts of the Partnership are maintained on the accrual basis of accounting for both federal income tax purposes and financial reporting purposes. (3) Investments in Real Estate - Effective with the decision to liquidate, the carrying amounts of assets and liabilities were adjusted from their historical bases to the amounts of cash expected from their realization and settlement. Because of the expected short liquidation period, the effects of discounting would not be significant and have been ignored. At September 30, 2010, the estimated real estate values were based upon subsequent sales of three properties and comparable sales of similar properties for the other property. At December 31, 2009, the estimated real estate values were based upon comparable sales of similar properties. It is reasonably possible that the amounts expected to be realized in the liquidation process may change in the near term. On October 5, 2009, the Partnership sold its remaining 9.3699% interest in the Taco Cabana restaurant in San Antonio, Texas to the tenant. The Partnership received net sale proceeds of $158,406. At the time of sale, the estimated net realizable value was $158,000. At June 30, 2009, based on the signed purchase agreement, the Partnership recognized an $18,000 adjustment to decrease the estimated net realizable value of the property. During the first nine months of 2010 and 2009, the Partnership distributed net sale proceeds of $121,086 and $103,939 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $6.32 and $5.43 per Limited Partnership Unit, respectively. AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) In March 2009, Tumbleweed, Inc., the tenant of the Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter 11 bankruptcy reorganization. In July 2009, the tenant contacted the Partnership and offered to assume the Lease and extend the Lease term five years in exchange for a 15% rent reduction for a five-year period beginning on September 1, 2009. The Partnership accepted this offer and agreed to a Lease Amendment, which was subject to court approval of the tenant's Plan of Reorganization. In December 2009, the bankruptcy court approved the Plan of Reorganization. Under the Plan, Tumbleweed assumed the Lease for this property and the Lease amendment became effective. On September 1, 2014, the rent will revert to the original amount due under the Lease. As of the date of this report, Tumbleweed has complied with all Lease terms. At June 30, 2009, based on the proposed rent reduction and an analysis of market conditions in the area, the Partnership recognized a $110,000 adjustment to decrease the estimated net realizable value of the property. In April 2010, the Partnership signed a non-binding letter of intent to sell the Tumbleweed restaurant in Chillicothe, Ohio to an unrelated third party. Based on the letter of intent, the Partnership recognized a $28,000 adjustment to decrease the estimated net realizable value of the property at March 31, 2010. In August 2010, the parties entered into a written purchase agreement. For the nine months ended September 30, 2010, the Partnership incurred expenses related to the sale of property of $648. On October 28, 2010, the sale closed with the Partnership receiving net proceeds of approximately $480,000. On October 5, 2010, the Partnership sold its remaining 0.7606% interest in the Fuddruckers restaurant in Thornton, Colorado to an unrelated third party. The Partnership received net sale proceeds of approximately $4,000, which was equal to the property's estimated net realizable value. On October 5, 2010, the Partnership sold its remaining 7.5158% interest in the Tractor Supply store in Bristol, Virginia to an unrelated third party. The Partnership received net sale proceeds of approximately $121,600, which was equal to the property's estimated net realizable value. (4) Payable to AEI Fund Management, Inc. - AEI Fund Management, Inc. performs the administrative and operating functions for the Partnership. The payable to AEI Fund Management represents the balance due for those services. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 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 Partnership's financial condition and results of operations, including the following: Market and economic conditions which affect the value of the properties the Partnership 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 the Partners; resolution by the General Partners of conflicts with which they may be confronted; the effect of tenant defaults; and the condition of the industries in which the tenants of properties owned by the Partnership operate. Application of Critical Accounting Policies The preparation of the Partnership's financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates these estimates on an ongoing basis, including those related to the carrying value of real estate and the allocation by AEI Fund Management, Inc. of expenses to the Partnership as opposed to other funds they manage. Effective October 1, 2007, the Partnership adopted the liquidation basis of accounting because the General Partners anticipated the liquidation of the Partnership during 2008. In accordance with the liquidation basis of accounting, assets are recorded at their estimated net realizable value (the amount of cash expected to be received) and liabilities are recorded at the amount estimated to be paid to creditors and Partners. At September 30, 2010, the estimated real estate values were based upon subsequent sales of three properties and comparable sales of similar properties for the other property. 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 Partnership reimburses these expenses subject to detailed limitations contained in the Partnership Agreement. Management of the Partnership has discussed the development and selection of the above accounting estimates and the management discussion and analysis disclosures regarding them with the managing partner of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) Results of Operations For the nine months ended September 30, 2010 and 2009, while in the liquidation phase, the Partnership recognized rental income of $55,750 and $79,678, respectively. In 2010, rental income decreased mainly as a result of a property sale. During the same periods, the Partnership recognized interest income of $5,777 and $5,994, respectively. For the nine months ended September 30, 2010 and 2009, while in the liquidation phase, the Partnership incurred Partnership administration expenses from affiliated parties of $37,318 and $43,175, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Partners. As the Partnership's asset base decreases due to property sales, it is allocated a smaller share of expenses that are allocated by AEI Fund Management, Inc. based on the relative assets of the funds under management. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $16,507 and $17,650, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. In March 2009, Tumbleweed, Inc., the tenant of the Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter 11 bankruptcy reorganization. In July 2009, the tenant contacted the Partnership and offered to assume the Lease and extend the Lease term five years in exchange for a 15% rent reduction for a five-year period beginning on September 1, 2009. The Partnership accepted this offer and agreed to a Lease Amendment, which was subject to court approval of the tenant's Plan of Reorganization. In December 2009, the bankruptcy court approved the Plan of Reorganization. Under the Plan, Tumbleweed assumed the Lease for this property and the Lease amendment became effective. On September 1, 2014, the rent will revert to the original amount due under the Lease. As of the date of this report, Tumbleweed has complied with all Lease terms. At June 30, 2009, based on the proposed rent reduction and an analysis of market conditions in the area, the Partnership recognized a $110,000 adjustment to decrease the estimated net realizable value of the property. In April 2010, the Partnership signed a non-binding letter of intent to sell the Tumbleweed restaurant in Chillicothe, Ohio to an unrelated third party. Based on the letter of intent, the Partnership recognized a $28,000 adjustment to decrease the estimated net realizable value of the property at March 31, 2010. In August 2010, the parties entered into a written purchase agreement. For the nine months ended September 30, 2010, the Partnership incurred expenses related to the sale of property of $648. On October 28, 2010, the sale closed with the Partnership receiving net proceeds of approximately $480,000. For the nine months ended September 30, 2010 and 2009, the Partnership recognized adjustments of estimated values of ($26,129) and ($124,243), respectively, resulting from the application of the liquidation basis of accounting and recording its assets at estimated net realizable value and liabilities at the amount estimated to be paid. Management believes inflation has not significantly affected income from operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) Liquidity and Capital Resources In January 2009, the Managing General Partner solicited by mail a proxy statement seeking the consent of the Limited Partners, as required by Section 6.1 of the Partnership Agreement, to initiate the final disposition, liquidation and distribution of all of the Partnership's properties and assets within the next year. On February 24, 2009, the proposal was approved with a majority of Units voted in favor of the proposal. As a result, the Managing General Partner is proceeding with the planned liquidation of the Partnership. At this time, the Partnership anticipates that it will sell its remaining property and liquidate prior to December 31, 2010. During the nine months ended September 30, 2010, while in the liquidation phase, the Partnership's Net Assets in Liquidation decreased $149,734 mainly as a result of distributions paid to the Partners in excess of cash generated from operating activities and a decrease in the estimated net realizable value of a property. During the nine months ended September 30, 2009, while in the liquidation phase, the Partnership's Net Assets in Liquidation decreased $231,941 as a result of distributions paid to the Partners in excess of cash generated from operating activities and a decrease in the estimated net realizable value of property. On October 5, 2009, the Partnership sold its remaining 9.3699% interest in the Taco Cabana restaurant in San Antonio, Texas to the tenant. The Partnership received net sale proceeds of $158,406. At the time of sale, the estimated net realizable value was $158,000. At June 30, 2009, based on the signed purchase agreement, the Partnership recognized an $18,000 adjustment to decrease the estimated net realizable value of the property. On October 5, 2010, the Partnership sold its remaining 7.5158% interest in the Tractor Supply store in Bristol, Virginia to an unrelated third party. The Partnership received net sale proceeds of approximately $121,600, which was equal to the property's estimated net realizable value. On October 5, 2010, the Partnership sold its remaining 0.7606% interest in the Fuddruckers restaurant in Thornton, Colorado to an unrelated third party. The Partnership received net sale proceeds of approximately $4,000, which was equal to the property's estimated net realizable value. One of the Partnership's primary uses of cash is distribution payments to Partners. The Partnership 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 Partnership attempts to maintain a stable distribution rate from quarter to quarter. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) For the nine months ended September 30, 2010 and 2009, the Partnership declared distributions of $128,788 for each period, which were distributed 99% to the Limited Partners and 1% to the General Partners. The Limited Partners received distributions of $127,500 and the General Partners received distributions of $1,288 for each period. During the first nine months of 2010 and 2009, the Partnership distributed net sale proceeds of $121,086 and $103,939 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $6.32 and $5.43 per Limited Partnership Unit, respectively. The rent from the Partnership's remaining property plus the interest earned on its cash reserve will not be sufficient to pay the Partnership's administrative expenses and the property management expenses related to the properties. Therefore, the Partnership will need to use a portion of its cash reserve to pay these expenses until the property is sold and the Partnership is liquidated. Future distributions declared, if any, prior to the final liquidating distribution, will also be paid from the cash reserve. The cash reserve should be adequate to meet the Partnership's obligations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not required for a smaller reporting company. ITEM 4. CONTROLS AND PROCEDURES. (a) Disclosure Controls and Procedures. Under the supervision and with the participation of management, including its President and Chief Financial Officer, the Managing General Partner of the Partnership 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 General Partner 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 General Partner, 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 Partnership is a party or of which the Partnership's property is subject. ITEM 1A. RISK FACTORS. Not required for a smaller reporting company. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. (a) None. (b) Not applicable. (c) Pursuant to Section 7.7 of the Partnership Agreement, as amended, each Limited Partner has the right to present Units to the Partnership for purchase by submitting notice to the Managing General Partner. The purchase price of the Units is equal to 90% of the net asset value per Unit as determined by the Managing General Partner in accordance with the provisions of the Partnership Agreement. Units tendered to the Partnership are redeemed at the purchase price established for the quarter in which the Partnership received a notice at least 60 days prior to the repurchase dates of January 1st, April 1st, July 1st and October 1st subject to the following limitations. The Partnership is not obligated to purchase in any year more than 5% of the number of Units outstanding at the beginning of the year. In no event shall the Partnership be obligated to purchase Units if, in the sole discretion of the Managing General Partner, such purchase would impair the capital or operation of the Partnership. During the period covered by this report, the Partnership did not purchase any Units. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS. 31.1 Certification of Chief Executive Officer of General Partner 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 General Partner 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 General Partner pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 10, 2010 AEI Real Estate Fund XVIII Limited Partnership By: AEI Fund Management XVIII, Inc. Its: Managing General Partner By: /s/ ROBERT P JOHNSON Robert P. Johnson President (Principal Executive Officer) By: /s/ PATRICK W KEENE Patrick W. Keene Chief Financial Officer (Principal Accounting Officer)