As filed with the Securities Exchange Commission on April 4, 2007

                                                      File No. 333-125266

            U. S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                   POST-EFFECTIVE AMENDMENT NO. 6  TO
                              FORM SB-2
                       REGISTRATION STATEMENT
                  Under the Securities Act of 1933



                   AEI INCOME & GROWTH FUND 26 LLC
           (Name of small business issuer in its charter)


          Delaware                 6500                41-2173048
       (State of other      (Primary Standard         (IRS Employer
        jurisdiction            Industrial            Identification
      of incorporation)       Classification             Number)
                               Code Number)

 30 East Seventh Street        Robert P. Johnson           Copies to:
      Suite 1300             30 East Seventh Street         Thomas O. Martin
 St. Paul, Minnesota 55101        Suite 1300             Dorsey & Whitney LLP
 (651) 227-7333 or          St. Paul, Minnesota 55101  50 South Sixth Street
 (800) 328-3519                (651) 227-7333 or             Suite 1500
 (Address and telephone         (800) 328-3519         Minneapolis, Minnesota
 number of principal       (Name, address, including         55402-1498
 executive offices and             zip code
 intended principal place   and telephone number of
 of business)               agent for service of
                                 process)



    The Registrant hereby amends this Registration Statement on such
date  or dates  as  may  be  necessary  to  delay its effective date
until   the   Registrant  shall  file  a  further   amendment  which
specifically   states  that  this  Registration   Statement    shall
thereafter  become  effective in accordance with Section 8(a) of the
Securities   Act   of 1933 or until the Registration Statement shall
become  effective on   such  date as the Commission, acting pursuant
to said Section 8(a), may determine.



                   AEI INCOME & GROWTH FUND 26

                    LIMITED LIABILITY COMPANY


           10,000,000 Limited Liability Company Units
                         ($10 Per Unit)



                        SUPPLEMENT NO. 6

                       DATED April __, 2007



This  Supplement  is distributed only with the  Prospectus  dated
October 20, 2005 and must be read in conjunction therewith.


                 IMPORTANT NOTE ON COMPLETION OF
                     SUBSCRIPTION AGREEMENT

Our  Subscription Agreement requires you to fill in the  date  of
the  most  current  supplement in the "Investor  Representations"
section  (question number 7 on page two).  If there is a  sticker
supplement on page 2 or 3 of this Supplement, you should use  the
date  of  the  latest  sticker  supplement  in  the  Subscription
Agreement.  If there is no sticker supplement on page 2 or 3, you
should use April __, 2007  (the date of this Supplement). If  you
do not  complete the  Subscription  Agreement  with  the  correct
supplement date, your order will be delayed until we can  confirm
you have received the most current supplement.




                      AEI SECURITIES, INC.
                     1300 Wells Fargo Place
                       30 East 7th Street
                    St. Paul, Minnesota 55101
                         (651) 227-7333
                         (800) 328-3519
                       FAX (651) 227-7705



           This page reserved for Sticker Supplements

                             -2-

           This page reserved for Sticker Supplements

                             -3-

                         THIS SUPPLEMENT


       We are distributing this supplement to update information
that is contained in the prospectus dated October 20, 2005 of AEI
Income & Growth Fund 26 LLC. We are distributing this supplement
only with the prospectus, which provides detailed information
related to AEI Fund 26. In particular, this supplement provides
more information on the following topics:

  Current Status-Release From Escrow                       5
  Repurchase of Units                                      5
  Property                                                 5
  Selected Financial Data                                  8
  Management's Discussion and Analysis                     9
  Financial Statements of the LLC at December 31,
   2006  and 2005 and for the Periods Then  Ended         13
  Balance Sheet of the Managing Member at
   December 31, 2006 and 2005                             28
  Exhibit B - Prior Performance Tables                   B-1

       If you have received this supplement, you should also have
received a copy of the prospectus. You should carefully review
the prospectus for a detailed description of an investment in AEI
Fund 26, including information relating to our management, our
investment objectives and the risks of the investment.

       We encourage you to read the "Risks" described on Pages 8
to 13 of the prospectus. We believe the most significant risks
include the following:

       You will not be able to evaluate our properties before
       they are acquired;

       You will be required to rely on our managers for all
       facets of our operations, including selection, operation
       and sale of our properties;

       As an investor, you will have the right to vote only on a
       limited number of matters;

       We will make substantial payments to our managers
       regardless of whether we are profitable;

       Because there will be no market for the units and
       restrictions will be placed on their transfer you may be
       unable to resell the units except at a substantial
       discount from your purchase price;

       Our managers will operate under a number of conflicts of
       interest;

       We are not a mutual fund or investment company and are
       not regulated under the Federal Investment Company Act.

                             -4-


                         CURRENT STATUS

Release from Escrow

       The prospectus indicated that AEI Fund 26 would not be
capitalized, and all subscription funds would be held in escrow,
until we had received subscriptions for 150,000 units
($1,500,000). We obtained subscriptions for the 150,000 units
required for release of escrow proceeds and the escrow proceeds
were released on April 3, 2006. We have commenced the normal
operation of investigating the acquisition of properties and
have, through the date of this supplement, acquired four
properties. See "Property." Pending investment in properties,
subscription proceeds have been invested in a short-term money
market account. See "Management's Discussion and Analysis."

       At March 31, 2007, we had accepted subscriptions for
1,088,039.9 units for aggregate proceeds of $10,880,399. Our
managers have determined to extend the offering of units to the
earlier of the sale of all units or October 19, 2007.

                       REPURCHASE OF UNITS

       We have amended the operating agreement to allow a grantor
trust to present its units to AEI Fund 26 for repurchase at 100%
of the net value per unit upon the death of the grantor of the
trust.  The terms and conditions that apply to this situation are
identical to those that apply to the repurchase of units upon the
death of an investor, who is a natural person.

                            PROPERTY

       We have committed that we will acquire only commercial,
net leased properties and that most of those properties will be
leased to corporate tenants in the chain restaurant and retail
segments of the real estate market.  Before we would commit to
purchase properties of another character, such as a multi-tenant,
residential or other form of non-commercial property, we would
present such proposed acquisition to our limited members for
approval.

       We describe below all of the properties we have purchased
since our formation and any properties that we have an
outstanding commitment to purchase through the date of this
supplement. The properties are leased to various tenants through
triple net leases, which are classified as operating leases.
Under a triple net lease, the tenant is responsible for all real
estate taxes, insurance, maintenance, repairs and operating
expenses of the property. The only exceptions are under the
leases for the Sports Authority and Advance Auto Parts stores, we
are responsible for repairs to the structural components of the
building, except for the roof, which is the tenant's
responsibility. Since each property is leased to a single tenant
on a long-term basis under a triple net lease that transfers
substantially all of the operating costs to the tenant, we
believe that financial information about the tenants or
guarantors of each lease is more relevant than financial
statements of the property.

       Sports Authority (formerly Gart Sports) - Wichita, Kansas.
In order to facilitate the purchase of our first property, AEI
Fund Management XVII, Inc. (AFMX), an affiliate of our managers,
purchased a 40% interest in a Sports Authority store in Wichita,
Kansas for $2,230,753 from an unrelated third party. On April 3,
2006, we purchased a 29.5% interest in the property from AFMX. In

                             -5-


May and June 2006, we purchased the remaining 10.5% interest from
AFMX. The price we paid was equal to the price paid by AFMX plus
the expenses incurred to transfer ownership of the property to
us, which were minimal. During the period the property was owned
by AFMX, the property generated net income of $6,199, which was
paid to us. There was no benefit arising out of the transaction
to our managers or their affiliates apart from compensation
otherwise permitted by our operating agreement.

       The property is leased to TSA Stores, Inc. under a lease
agreement with a remaining primary term of 11 years. The lease
may be renewed by the tenant for up to three consecutive terms of
five years each. The lease requires initial annual rent of
$186,059, which is scheduled to increase by 10% on March 1, 2007
and every five years thereafter. The remaining interest in the
property was purchased by AEI Income & Growth Fund 25 LLC, an
affiliate of AEI Fund 26.

       The store was constructed in 1996 and renovated in 2001
and is a 52,259 square foot building situated on approximately
5.6 acres at 6959 E. 21st Street North on the northeast side of
Wichita. The Bradley Fair shopping center is nearby, drawing
traffic into the area with its blend of stores and restaurants
situated in an upscale lakeside location. The population within a
five-mile radius is approximately 153,000, with an average
household income of more than $58,000.

       TSA Stores, Inc. is a wholly owned subsidiary of The
Sports Authority, Inc. (TSA), which has guaranteed the lease.
TSA, headquartered in Englewood, Colorado, is one of the nation's
largest full-line sporting goods retailers. The company offers a
comprehensive high-quality assortment of brand name sporting
apparel and equipment at competitive prices. As of January 28,
2006, TSA operated 398 stores in 45 states under The Sports
Authority, Gart Sports, Sportmart and Oshman's names. For the
fiscal year ended January 28, 2006, TSA reported a net worth of
approximately $555 million, net sales of approximately $2.5
billion and net income of approximately $55 million. On January
23, 2006, TSA announced that it had entered into a definitive
agreement to be acquired by an investor group led by Leonard
Green & Partners, L.P., and including members of TSA's senior
management team, for $1.3 billion in cash and assumed debt. On
May 3, 2006, TSA announced the completion of the acquisition.
TSA, formerly traded on the New York Stock Exchange under the
symbol TSA, will no longer be publicly traded.  Prior to May 3,
2006, TSA filed reports with the SEC that are available on-line
at the SEC's web site (www.sec.gov).

       Advance Auto - Middletown, Ohio.  On June 1, 2006, we
purchased a 55% interest in an Advance Auto Parts store in
Middletown, Ohio for $1,022,289 from an unrelated third party.
The property is leased to Advance Stores Company, Inc. under a
lease agreement with a remaining primary term of 13.2 years. The
lease may be renewed by the tenant for up to three consecutive
terms of five years each. The lease requires initial annual rent
of $71,679, which is scheduled to increase 10% on July 22, 2014
and 5% at the beginning of each renewal term. The remaining
interest in the property was purchased by AEI Income & Growth
Fund 24 LLC, an affiliate of AEI Fund 26.

       The store was constructed in 2004 and is a 6,880 square
foot building situated on approximately .88 acres. The store is
located at 65 North University Boulevard in Middletown, which is
situated on Interstate 75 between Cincinnati and Dayton. The
store is surrounded by single family housing and retail
businesses that support the local community. The population
within a five-mile radius is approximately 75,000, with an
average household income of over $54,000.

                             -6-

       Advance Auto Parts, Inc. reports that it conducts all of
its operations through its wholly owned subsidiary, Advance
Stores Company, Inc. As the parent company of the tenant, Advance
Auto Parts does not guarantee the lease and is not responsible
for any lease obligations. Advance Auto Parts, headquartered in
Roanoke, Virginia, is the second-largest retailer of automotive
aftermarket parts, accessories, batteries, and maintenance items
in the United States, based on store count and sales. The Company
serves both the do-it-yourself and professional installer
markets. As of December 30, 2006, the Company operated 2,995
stores in 40 states, Puerto Rico, and the Virgin Islands. For the
fiscal year ended December 30, 2006, Advance Auto Parts reported
a net worth of approximately $1.0 billion, net sales of
approximately $4.6 billion, and net income of approximately $231
million. Advance Auto Parts is traded on the New York Stock
Exchange under the symbol AAP and files reports with the SEC that
are available on-line at the SEC's web site (www.sec.gov).

       Applebee's - Indianapolis, Indiana.  On September 21,
2006, we purchased a 37% interest in an existing, seasoned
Applebee's restaurant in Indianapolis, Indiana for $1,130,049.
The property is leased to the seller, Apple Indiana II LLC, under
a lease agreement with a primary term of 20 years. The lease may
be renewed by the tenant for up to four consecutive terms of five
years each. The lease requires initial annual rent of $81,497 for
our 37% interest, which amount will increase every five years by
7.5%.

       The restaurant was constructed in 1997 and is a 5,230
square foot building situated on approximately 1.3 acres. The
restaurant is located at 7345 East Washington Street near the
busy intersection of Routes 40 and 52. The restaurant is located
on a heavily developed commercial thoroughfare in a densely-
populated residential neighborhood on the east side of
Indianapolis. The population within a five-mile radius is
approximately 178,000, with an average household income of over
$49,000.

       During the fourth quarter of 2006, we purchased the
remaining 63% interest in this property from AEI Fund Management
XVII, Inc. (AFMX), an affiliate of our managers. In order to
facilitate our purchase of this property, AFMX purchased the 63%
interest in the property for $1,924,138. The lease requires
initial annual rent of $138,765 for this interest. The price we
paid was equal to the price paid by AFMX plus the expenses
incurred by it to transfer ownership of the property to us. Those
expenses were minimal. During the period the property was owned
by AFMX, the property generated a net loss of $1,616, which was
charged to us. There was no benefit arising out of the
transaction to our managers or their affiliates apart from
compensation otherwise permitted by our operating agreement.

       Apple Indiana II LLC is a subsidiary of Apple American
Group LLC (AAG), which has guaranteed the lease. As of December
2006, AAG operated approximately 130 Applebee's restaurants in
eight states and was the largest franchisee in the Applebee's
system. For the fiscal year ended December 31, 2006, AAG reported
a net worth of approximately $48.0 million, total revenues of
$360.7 million, earnings before interest, taxes, depreciation and

                             -7-

amortization of approximately $33.0 million, and net income of
$7.1 million. AAG is a privately held company.

       Applebee's - Crawfordsville, Indiana.  On December 29,
2006, we purchased a 40% interest an existing, seasoned
Applebee's restaurant in Crawfordsville, Indiana from AFMX. In
order to facilitate our purchase of this property, AFMX purchased
the 40% interest in the property for $1,237,771 from Apple
Indiana II LLC. The price we paid was equal to the price paid by
AFMX plus the expenses incurred by it to transfer ownership of
the property to us. Those expenses were minimal. During the
period the property was owned by AFMX, the property generated a
net loss of $2,812, which was charged to us. There was no benefit
arising out of the transaction to our managers or their
affiliates apart from compensation otherwise permitted by our
operating agreement.

       This property is also leased to Apple Indiana II LLC under
a lease agreement with a primary term of 20 years. The lease may
be renewed by the tenant for up to four consecutive terms of five
years each. The lease requires initial annual rent of $89,289 for
our 40% interest, which amount will increase every five years by
7.5%. The lease is guaranteed by AAG.  The remaining interest in
the property was purchased by AEI Income & Growth Fund XXII
Limited Partnership, an affiliate of AEI Fund 26.

       The restaurant was constructed in 1996 and is a 5,260
square foot building situated on approximately 1.9 acres. The
restaurant is located at 1516 South Washington Street in
Crawfordsville, which is approximately 45 miles northwest of
Indianapolis. The restaurant is located at the center of a major
shopping district that includes Target, Wal-Mart, Staples, and a
Kroger supermarket. The population within a five-mile radius is
approximately 22,000, with an average household income of over
$51,000.

                      SELECTED FINANCIAL DATA

       The following selected financial data for AEI Fund 26 for
the year ended December 31, 2006 and for the period from
inception (March 14, 2005) to December 31, 2005 has been derived
from, and should be read in conjunction with, the Financial
Statements included elsewhere in this supplement:

                                For the Year Ended      For the Period Ended
                                 December 31, 2006       December  31,2005

Rental Income                       $  218,953          $       0
                                     =========           ========

Interest Income                     $   10,263          $       4
                                     =========           ========

Net Income                          $  102,013          $       4
                                     =========           ========

Net Income Per LLC Unit             $      .21          $       0
                                     =========           ========

Weighted Average Units Outstanding     460,607                  0
                                     =========           ========

Total Assets at Period End          $7,613,621          $   1,004
                                     =========           ========
                         -8-

              MANAGEMENT'S DISCUSSION AND ANALYSIS

       The following Management's Discussion and Analysis
discusses our financial position at December 31, 2006 and 2005
and results of operations for the year ended December 31, 2006
and for the period from inception (March 14, 2005) to December
31, 2005. You should read this information in conjunction with
our financial statements contained in this supplement and in the
prospectus. You should also read this section in the context of
the descriptions in the prospectus of our planned operations,
particularly the sections of the prospectus describing the
offering, the period over which and the policy employed in
purchasing properties, and the application of proceeds contained
in the sections of the prospectus captioned "Estimated Use of
Proceeds," "Investment Objectives and Policies," and
"Compensation to Managers and Affiliates."

       The Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of federal
securities laws which represent management's expectations or
beliefs concerning future events, including statements regarding
anticipated application of cash, expected returns from rental
income, growth in revenue, the sufficiency of cash to meet
operating expenses, rates of distribution, and other matters.
These, and other forward looking statements made by our managers,
must be evaluated in the context of the risk factors described in
the prospectus and a number of factors that may affect our
financial condition and results of operations, including the
following:

    Market and economic conditions which affect the value
    of the properties we own and the cash from rental
    income such properties generate;

    the federal income tax consequences of rental income,
    deductions, gain on sales and other items and the
    affects of these consequences for members;

    resolution by our managers of conflicts with which they
    may be confronted;

    the success of our managers 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 purchased by AEI Fund 26 operate.


The Application of Critical Accounting Policies

       The preparation of our financial statements requires our
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. Our
management evaluates these estimates on an ongoing basis,
including those related to the carrying value of real estate and
the allocation of expenses by our managers at AEI Fund
Management, Inc., to AEI Fund 26 as opposed to other funds they
manage.

       We purchase properties and record them in the financial
statements at the lower of cost or estimated realizable value. We
initially record the properties at cost (including capitalized

                             -9-

acquisition expenses). We are required to periodically evaluate
the carrying value of properties to determine whether their
realizable value has declined. For properties we will hold and
operate, we determine whether impairment has occurred by
comparing the property's probability-weighted cash flows to its
current carrying value. For properties held for sale, we
determine whether impairment has occurred by comparing the
property's estimated fair value less cost to sell to its current
carrying value. If the carrying value is greater than the
realizable value, an impairment loss is recorded to reduce the
carrying value of the property to its realizable value. A change
in these assumptions or analysis could cause material changes in
the carrying value of the properties.

       Our managers allocate 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. We reimburse these expenses subject to detailed
limitations contained in our operating agreement.

       Our managers have developed and selected the above
accounting estimates and the management discussion and analysis
disclosures regarding them. These estimates and disclosures were
reviewed and approved by our senior management.

Results of Operations

       We were organized on March 14, 2005. From this date until
the initial subscription proceeds of $1,932,316 were released
from escrow on April 3, 2006, we had received only $1,000 of
capital from our managers, had not conducted any business
operations other than those related to the offering and sale of
units and had not admitted any investors as limited members.

       For the year ended December 31, 2006, we recognized rental
income of $218,953, representing rent from four properties
acquired during the period. At December 31, 2006, the scheduled
annual rent for the four properties was $567,289.

       We purchased a 40% interest in a Sports Authority
(formerly Gart Sports) store in Wichita, Kansas from an affiliate
of our managers. During the period the property was owned by the
affiliate, the property generated net income of $6,199. We
purchased a 63% interest in an Applebee's restaurant in
Indianapolis, Indiana and a 40% interest in an Applebee's
restaurant in Crawfordsville, Indiana from an affiliate of our
managers.  During the period the properties were owned by the
affiliate, the properties generated a net loss of $1,616 and
$2,812, respectively.  Pursuant to our operating agreement, these
amounts were paid to or charged to us and are shown as
Miscellaneous Income on the Income Statement.

       For the year ended December 31, 2006, we incurred LLC
administration expenses from affiliated parties of $40,207. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the limited members. During
the same period, we incurred LLC administration and property
management expenses from unrelated parties of $5,744. 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.

                             -10-

       For the year ended December 31, 2006, we recognized
interest income of $10,263 mainly from subscription proceeds
temporarily invested in a money market account.

       Inflation has had a minimal effect on income from
operations.  Our leases may contain provisions to increase rent
based on the increase in the Consumer Price Index over a
specified period.  In addition, some of our leases may contain
rent clauses which entitle us to receive additional rent in
future years if gross receipts for the property exceed certain
specified amounts.  Increases in sales volumes of the tenants,
due to inflation and real sales growth, may result in an increase
in rental income over the term of the leases.  Inflation also may
cause the real estate to appreciate in value.  However, inflation
and changing prices may have an adverse impact on the operating
margins of the properties' tenants, which could impair their
ability to pay rent and subsequently reduce the net cash flow
available for distributions.

Liquidity and Capital Resources

       Our primary sources of cash are proceeds from the sale of
units, interest income, rental income and proceeds from the sale
of property. Our primary uses of cash are investment in real
properties, payment of expenses involved in the sale of units,
the management of properties, the organization and administration
of AEI Fund 26, and the payment of distributions.

       We generated $271,540 of cash from operations during the
year ended December 31, 2006, representing net income of
$102,013, a non-cash expense of $83,023 for depreciation and an
$86,504 increase in the payable to our managers for management
expenses.

       The major components of our cash flow from investing
activities are investments in real estate and proceeds from the
sale of real estate.  During the year ended December 31, 2006, we
expended $7,545,000 to invest in real properties (inclusive of
acquisition expenses).  During the second quarter of 2006, we
purchased a 40% interest in a Sports Authority (formerly Gart
Sports) store in Wichita, Kansas for $2,230,753.  On June 1,
2006, we purchased a 55% interest in an Advance Auto Parts store
in Middletown, Ohio for $1,022,289.  On September 21, 2006, we
purchased a 37% interest in an Applebee's restaurant in
Indianapolis, Indiana for $1,130,049. During the fourth quarter
of 2006, we purchased the remaining 63% interest in this property
for $1,924,138. On December 29, 2006, we purchased a 40% interest
in an Applebee's restaurant in Crawfordsville, Indiana for
$1,237,771.

       The Sports Authority store, the Applebee's restaurant in
Crawfordsville, Indiana and the 63% interest in the Applebee's
restaurant in Indianapolis, Indiana were purchased from AEI Fund
Management XVII, Inc. (AFMX), an affiliate of our managers.  In
order to facilitate our purchase of these property interests,
AFMX purchased the properties from unrelated third parties.  For
property interests purchased from AFMX, the price we paid was
equal to the price paid by AFMX plus the expenses incurred to
transfer ownership of the property to us, which were minimal.
There was no benefit arising out of the transactions to our
managers or their affiliates apart from compensation otherwise
permitted by the operating agreement.

       During the offering of units, our primary source of cash
flow will be from the sale of LLC units. We commenced the
offering of LLC units to the public through a registration
statement that became effective October 20, 2005 and will
continue until October 19, 2007, unless all 10,000,000 LLC units
are sold before then. The registration statement indicated that
AEI Fund 26 would not be capitalized, and all subscription funds
would be held in escrow, until we had received subscriptions for

                             -11-

150,000 units ($1,500,000). We obtained subscriptions for the
150,000 units required for release of escrow proceeds and on
April 3, 2006, we accepted subscriptions for 193,231.6 units for
aggregate proceeds of $1,932,316. Through December 31, 2006, we
raised a total of $8,821,268 from the sale of 882,126.8 units.
From subscription proceeds, we paid organization and syndication
costs (which constitute a reduction of capital) of $1,307,017.

       After we acquire all our properties, our primary use of
cash flow is distribution and redemption payments to members. We
declare our regular quarterly distributions before the end of
each quarter and pay the distribution in the first ten days after
the end of each quarter. For the year ended December 31, 2006, we
declared distributions of $178,070, which were distributed 97% to
limited members and 3% to our managers.

       Beginning in April 2009, we may acquire units from limited
members who have tendered their units. Such units may be acquired
at a discount. We 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 we be obligated to purchase
units if, in the sole discretion of our managers, such purchase
would impair our capital or operations.

       Our operating agreement requires that all proceeds from
the sale of units, subject to a reasonable reserve for ongoing
operations, be invested or committed to investment in properties
by the later of two years after the date the offering of units
commences or twelve months after the offering terminates. At
March 31, 2007, we had no formal contractual commitments to
expend capital.

       Until capital is invested in properties, we will remain
extremely liquid. After we acquire all our properties, we will
attempt to maintain a cash reserve of only approximately .5% of
subscription proceeds. Because properties are purchased for cash
and leased under triple-net leases, this is considered adequate
to satisfy most contingencies.

                             -12-

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Members:
AEI Income & Growth Fund 26 LLC
St. Paul, Minnesota




     We have audited the accompanying balance sheet of AEI Income
& Growth Fund 26 LLC (a Delaware limited liability company) as of
December 31, 2006 and 2005 and the related statements of  income,
cash  flows  and  changes in members' equity for the  year  ended
December  31, 2006 and for the period from inception  (March  14,
2005)  to December 31, 2005.  These financial statements are  the
responsibility  of the Company's management.  Our  responsibility
is  to express an opinion on these financial statements based  on
our audit.

      We conducted our audit in accordance with the standards  of
the  Public  Company Accounting Oversight Board (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  An audit  includes
examining,  on a test basis, evidence supporting the amounts  and
disclosures in the financial statements.  An audit also  includes
assessing   the   accounting  principles  used  and   significant
estimates  made by management, as well as evaluating the  overall
financial  statement  presentation.  We believe  that  our  audit
provides a reasonable basis for our opinion.

      In  our opinion, the financial statements referred to above
present  fairly, in all material respects, the financial position
of  AEI  Income & Growth Fund 26 LLC as of December 31, 2006  and
2005,  and  the results of its operations and its cash flows  for
the  year  ended  December  31, 2006  and  for  the  period  from
inception  (March 14, 2005) to December 31, 2005,  in  conformity
with U.S. generally accepted accounting principles.



                       /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                               Certified Public Accountants

Minneapolis, Minnesota
March 23, 2007

                             -13-

                 AEI INCOME & GROWTH FUND 26 LLC
                          BALANCE SHEET
                           DECEMBER 31

                             ASSETS

                                                     2006          2005
CURRENT ASSETS:
  Cash and Cash Equivalents                      $   151,644   $     1,004

INVESTMENTS IN REAL ESTATE:
  Land                                             2,036,625             0
  Buildings and Equipment                          5,508,375             0
  Accumulated Depreciation                           (83,023)            0
                                                  -----------   -----------
      Net Investments in Real Estate               7,461,977             0
                                                  -----------   -----------
          Total Assets                           $ 7,613,621   $     1,004
                                                  ===========   ===========

                        LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.           $    86,504   $         0
  Distributions Payable                               87,919             0
                                                  -----------   -----------
      Total Current Liabilities                      174,423             0
                                                  -----------   -----------
MEMBERS' EQUITY (DEFICIT):
  Managing Members' Equity                            (1,278)        1,004
  Limited Members' Equity, $10 per Unit;
   10,000,000 Units authorized;
   882,127  Units issued and outstanding in 2006   7,440,476             0
                                                  -----------   -----------
      Total Members' Equity                        7,439,198         1,004
                                                  -----------   -----------
        Total Liabilities and Members' Equity    $ 7,613,621   $     1,004
                                                  ===========   ===========

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

                 AEI INCOME & GROWTH FUND 26 LLC
                       STATEMENT OF INCOME
        FOR THE YEAR ENDED DECEMBER 31, 2006 AND FOR THE
   PERIOD FROM INCEPTION (MARCH 14, 2005) TO DECEMBER 31, 2005


                                                       2006          2005

INCOME
  Rental Income                                  $   218,953   $         0
  Miscellaneous Income                                 1,771             0
                                                  -----------   -----------
      Total Income                                   220,724             0
                                                  -----------   -----------

EXPENSES:
  LLC Administration - Affiliates                     40,207             0
  LLC Administration and Property
     Management - Unrelated Parties                    5,744             0
  Depreciation                                        83,023             0
                                                  -----------   -----------
      Total Expenses                                 128,974             0
                                                  -----------   -----------

OPERATING INCOME                                      91,750             0

OTHER INCOME:
  Interest Income                                     10,263             4
                                                  -----------   -----------
NET INCOME                                       $   102,013   $         4
                                                  ===========   ===========

NET INCOME ALLOCATED:
  Managing Members                               $     3,060   $         4
  Limited Members                                     98,953             0
                                                  -----------   -----------
                                                 $   102,013   $         4
                                                  ===========   ===========

NET INCOME PER LLC UNIT                          $       .21   $         0
                                                  ===========   ===========

Weighted Average Units Outstanding                   460,607             0
                                                  ===========   ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
                      -15-

                 AEI INCOME & GROWTH FUND 26 LLC
                     STATEMENT OF CASH FLOWS
        FOR THE YEAR ENDED DECEMBER 31, 2006 AND FOR THE
   PERIOD FROM INCEPTION (MARCH 14, 2005) TO DECEMBER 31, 2005

                                                   2006            2005

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net  Income                                 $   102,013    $         4

   Adjustments To Reconcile Net Income
   To Net Cash Provided By Operating Activities:
     Depreciation                                    83,023              0
     Increase in Payable to
        AEI Fund Management, Inc.                    86,504              0
                                                 -----------    -----------
        Total Adjustments                           169,527              0
                                                 -----------    -----------
        Net Cash Provided By
            Operating Activities                    271,540              4
                                                 -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in Real Estate                   (7,545,000)             0
                                                 -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Capital Contributions from Managing Members           0          1,000
    Capital  Contributions from Limited Members   8,821,268              0
    Organization and Syndication Costs           (1,307,017)             0
    Increase in Distributions Payable                87,919              0
    Distributions to Members                       (178,070)             0
                                                 -----------    -----------
        Net Cash Provided By
            Financing Activities                  7,424,100          1,000
                                                 -----------    -----------
NET INCREASE IN CASH
   AND CASH EQUIVALENTS                             150,640          1,004

CASH AND CASH EQUIVALENTS, beginning of period        1,004              0
                                                 -----------    -----------
CASH AND CASH EQUIVALENTS, end of period        $   151,644    $     1,004
                                                 ===========    ===========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
                      -16-

                 AEI INCOME & GROWTH FUND 26 LLC
             STATEMENT OF CHANGES IN MEMBERS' EQUITY
        FOR THE YEAR ENDED DECEMBER 31, 2006 AND FOR THE
   PERIOD FROM INCEPTION (MARCH 14, 2005) TO DECEMBER 31, 2005


                                                                   Limited
                                                                    Member
                               Managing    Limited                  Units
                               Members     Members     Total     Outstanding


BALANCE, March 14, 2005      $      0   $        0  $        0           0

  Capital Contributions         1,000            0       1,000           0

  Net Income                        4            0           4
                              --------   ----------  ----------  ----------
BALANCE, December 31, 2005      1,004            0       1,004           0

  Capital Contributions             0    8,821,268   8,821,268   882,126.8

  Organization and
    Syndication Costs               0   (1,307,017) (1,307,017)

  Distributions                (5,342)    (172,728)   (178,070)

  Net Income                    3,060       98,953     102,013
                              --------   ----------  ----------  ----------
BALANCE, December 31, 2006   $ (1,278)  $7,440,476  $7,439,198   882,126.8
                              ========   ==========  ==========  ==========

 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
                      -17-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(1)  Organization -

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

     The  terms of the offering call for a subscription price  of
     $10 per LLC Unit, payable on acceptance of the offer.  Under
     the  terms of the Operating Agreement, 10,000,000 LLC  Units
     are  available for subscription which, if fully  subscribed,
     will  result  in  contributed Limited  Members'  capital  of
     $100,000,000.  The Company commenced operations on April  3,
     2006   when  minimum  subscriptions  of  150,000  LLC  Units
     ($1,500,000) were accepted.  At December 31, 2006, 882,126.8
     Units  ($8,821,268)  were subscribed  and  accepted  by  the
     Company.   The Managing Members have contributed capital  of
     $1,000.  The Company shall continue until December 31, 2055,
     unless  dissolved, terminated and liquidated prior  to  that
     date.

     During operations, any Net Cash Flow, as defined, which  the
     Managing Members determine to distribute will be distributed
     97%  to  the Limited Members and 3% to the Managing Members.
     Distributions to Limited Members will be made  pro  rata  by
     Units.

     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.

                             -18-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(1)  Organization - (Continued)

     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.

(2)  Summary of Significant Accounting Policies -

     Financial Statement Presentation

       The  accounts of the Company are maintained on the accrual
       basis  of  accounting for both federal income tax purposes
       and financial reporting purposes.

     Accounting Estimates

       Management  uses  estimates and assumptions  in  preparing
       these  financial statements in accordance  with  generally
       accepted  accounting  principles.   Those  estimates   and
       assumptions may affect the reported amounts of assets  and
       liabilities,  the  disclosure  of  contingent  assets  and
       liabilities,  and  the  reported  revenues  and  expenses.
       Actual results could differ from those estimates.

       The  Company regularly assesses whether market events  and
       conditions  indicate  that it is  reasonably  possible  to
       recover  the carrying amounts of its investments  in  real
       estate  from  future operations and sales.   A  change  in
       those  market events and conditions could have a  material
       effect on the carrying amount of its real estate.

     Cash Concentrations of Credit Risk

       The   Company's  cash  is  deposited  primarily   in   two
       financial  institutions and at times during  the  year  it
       may exceed FDIC insurance limits.
                             -19-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(2)  Summary of Significant Accounting Policies - (Continued)

     Statement of Cash Flows

       For  purposes  of  reporting cash  flows,  cash  and  cash
       equivalents  may include cash in checking,  cash  invested
       in   money   market  accounts,  certificates  of  deposit,
       federal  agency notes and commercial paper with a term  of
       three months or less.

     Receivables

       Credit  terms are extended to tenants in the normal course
       of   business.    The  Company  performs  ongoing   credit
       evaluations  of  its customers' financial  condition  and,
       generally, requires no collateral.

       Receivables   are   recorded  at   their   estimated   net
       realizable  value.   The  Company  follows  a  policy   of
       providing  an  allowance for doubtful  accounts;  however,
       based on historical experience, and its evaluation of  the
       current  status  of  receivables, the Company  is  of  the
       belief  that  such  accounts will be  collectible  in  all
       material  respects and thus an allowance is not necessary.
       Accounts  are considered past due if payment is  not  made
       on  a timely basis in accordance with the Company's credit
       terms.   Receivables considered uncollectible are  written
       off.

     Income Taxes

       The  income or loss of the Company for federal income  tax
       reporting  purposes  is  includable  in  the  income   tax
       returns  of  the Members.  In general, no recognition  has
       been  given to income taxes in the accompanying  financial
       statements.

       The  tax  return  and the amount of distributable  Company
       income  or loss are subject to examination by federal  and
       state  taxing authorities.  If such an examination results
       in  changes to distributable Company income or  loss,  the
       taxable   income   of  the  members  would   be   adjusted
       accordingly.

     Real Estate

       The  Company's  real  estate is leased  under  triple  net
       leases   classified  as  operating  leases.   The   leases
       provide  for  base  annual  rental  payments  payable   in
       monthly  installments.   The  Company  recognizes   rental
       revenue  according to the terms of the individual  leases.
       For  leases  which  contain stated rental  increases,  the
       increases  are  recognized in the year in which  they  are
       effective.   Contingent  rental  payments  are  recognized
       when  the  contingencies on which the payments  are  based
       are  satisfied  and the rental payments become  due  under
       the terms of the leases.
                             -20-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(2)  Summary of Significant Accounting Policies - (Continued)

       Real  estate is recorded at the lower of cost or estimated
       net  realizable value.  The Company compares the  carrying
       amount  of  its  properties to the estimated  probability-
       weighted  future  cash flows expected to result  from  the
       property and its eventual disposition.  If the sum of  the
       expected  future  cash  flows is less  than  the  carrying
       amount   of  the  property,  the  Company  recognizes   an
       impairment  loss  by  the amount  by  which  the  carrying
       amount  of  the  property exceeds the fair  value  of  the
       property.

       The  Company has capitalized as Investments in Real Estate
       certain  costs  incurred in the review and acquisition  of
       the  properties.  The costs were allocated  to  the  land,
       buildings and equipment.

       The   buildings   and  equipment  of   the   Company   are
       depreciated  using the straight-line method for  financial
       reporting purposes based on estimated useful lives  of  25
       years and 5 years, respectively.

       In  accordance  with  Statement  of  Financial  Accounting
       Standards  No.  144,  Accounting  for  the  Impairment  or
       Disposal  of Long-Lived Assets, upon complete disposal  of
       a  property or classification of a property as Real Estate
       Held  for Sale, the Company includes the operating results
       and  sale of the property in discontinued operations.   In
       addition,  the  Company  reclassifies  the  prior  periods
       operating  results and any partial sales of  the  property
       to discontinued operations.

       The  Company  accounts for properties owned as tenants-in-
       common  with  affiliated Companies and/or unrelated  third
       parties  using  the  proportionate  consolidation  method.
       Each  tenant-in-common owns a separate, undivided interest
       in  the properties.  Any tenant-in-common that holds  more
       than  a  50% interest does not control decisions over  the
       other    tenant-in-common   interests.    The    financial
       statements  reflect only this Company's  percentage  share
       of   the   properties'  land,  building   and   equipment,
       liabilities, revenues and expenses.

       The  Company's  properties  are subject  to  environmental
       laws  and  regulations  adopted  by  various  governmental
       entities  in the jurisdiction in which the properties  are
       located.    These  laws  could  require  the  Company   to
       investigate  and remediate the effects of the  release  or
       disposal  of  hazardous materials at  these  locations  if
       found.  For each property, an environmental assessment  is
       completed  prior to acquisition.  In addition,  the  lease
       agreements  typically  strictly prohibit  the  production,
       handling, or storage of hazardous materials (except  where
       incidental  to  the  tenant's  business  such  as  use  of
       cleaning  supplies)  in violation  of  applicable  law  to
       restrict  environmental and other  damage.   Environmental
       liabilities  are  recorded  when  it  is  determined   the
       liability  is  probable and the costs  can  reasonably  be
       estimated.   There were no environmental issues  noted  or
       liabilities recorded at December 31, 2006 and 2005.
                             -21-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(2)  Summary of Significant Accounting Policies - (Continued)

     Recently Issued Accounting Pronouncements

       Management  has  reviewed recently  issued,  but  not  yet
       effective,  accounting pronouncements and does not  expect
       the  implementation  of  these pronouncements  to  have  a
       significant effect on the Company's financial statements.

(3)  Related Party Transactions -

     The  Company  owns a 55% interest in an Advance  Auto  Parts
     store.  The remaining interest in this property is owned  by
     AEI  Income  &  Growth  Fund 24 LLC,  an  affiliate  of  the
     Company.

     During  the second quarter of 2006, the Company purchased  a
     40%  interest  in  a Sports Authority store for  $2,230,753.
     The  property  was purchased from AEI Fund Management  XVII,
     Inc. (AFMX), an affiliate of the Managing Members.  In order
     to  facilitate the purchase of the Company's first property,
     AFMX purchased the property from an unrelated third party on
     December  22, 2005.  The remaining interest in this property
     is owned by AEI Income & Growth Fund 25 LLC, an affiliate of
     the Company.

     During the fourth quarter of 2006, the Company purchased the
     remaining  63% of the Applebee's restaurant in Indianapolis,
     Indiana  that  it  did not already own for  $1,924,138.   On
     December  29, 2006, the Company purchased a 40% interest  in
     an  Applebee's  restaurant  in Crawfordsville,  Indiana  for
     $1,237,771.   In order to facilitate the Company's  purchase
     of  these  property interests, AFMX purchased the properties
     from  Apple  Indiana II LLC, an unrelated  third  party,  on
     September 21, 2006.  The remaining interest in the  property
     in  Crawfordsville is owned by AEI Income & Growth Fund XXII
     Limited Partnership, an affiliate of the Company.

     For  the  property interests purchased from AFMX, the  price
     paid by the Company was equal to the price paid by AFMX plus
     the  expenses  incurred by it to transfer ownership  of  the
     property to the Company, which were minimal.  There  was  no
     other  benefit  arising  out  of  the  transactions  to  the
     Managing Members or their affiliates apart from compensation
     otherwise permitted by the Operating Agreement.

                             -22-


                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(3)  Related Party Transactions - (Continued)

     AEI,  AFM  and  AEI  Securities,  Inc.  (ASI)  received  the
     following  compensation  and reimbursements  for  costs  and
     expenses from the Company:

                                         Total Incurred by the Company
                                         for the Year Ended December 31

                                                        2006        2005
a.AEI and AFM are reimbursed for all costs incurred in
  connection with managing the Company's operations,
  maintaining the Company's books and communicating
  the results of operations to the Limited Members.   $  40,207  $       0
                                                       ========   ========
b.AEI and AFM are reimbursed for all direct expenses they
  have paid on the Company's behalf to third parties
  relating to LLC administration and property
  management.  These expenses included printing costs,
  legal and filing fees, direct administrative costs,
  outside audit costs, taxes, insurance and other
  property costs.                                     $   5,744  $       0
                                                       ========   ========

c.AEI is reimbursed for all costs and direct expenses
  incurred by it in acquiring properties on behalf of
  the Company.                                        $ 120,713  $       0
                                                       ========   ========

d.ASI was the underwriter of the Company's offering.  AEI
  Capital Corporation is the sole stockholder of ASI, which is
  a member of the National Association of Securities Dealers,
  Inc.  ASI received, as underwriting commissions,10% for
  sale of certain subscription Units (a majority of this
  amount was re-allowed to other participating
  broker/dealers). These costs are treated as a reduction
  of members' capital.                                $ 865,953  $       0
                                                       ========   ========
e.AEI is reimbursed for all costs incurred in
  connection with managing the Company's offering
  and organization.                                   $ 220,077  $       0
                                                       ========   ========

f.AEI is reimbursed for all direct expenses it has paid on the
  Company's behalf to third parties relating to the offering
  and organization of the Company.  These expenses included
  printing costs, legal and filing fees, direct
  administrative costs, underwriting costs and due
  diligence fees.                                     $ 220,987  $       0
                                                       ========   ========

     The  payable  to  AEI Fund Management, Inc.  represents  the
     balance due for the services described in 3a, b, c, d and f.
     This balance is non-interest bearing and unsecured and is to
     be paid in the normal course of business.
                             -23-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(4)  Investments in Real Estate -

     The  Company leases its properties to various tenants  under
     triple net leases, which are classified as operating leases.
     Under a triple net lease, the tenant is responsible for  all
     real  estate  taxes,  insurance,  maintenance,  repairs  and
     operating expenses of the property.  The only exceptions are
     under  the Leases for the Sports Authority and Advance  Auto
     Parts stores, the Company is responsible for repairs to  the
     structural components of the building, except for the  roof,
     which  is  the  tenant's responsibility.  At  the  time  the
     properties were acquired, the remaining primary lease  terms
     varied  from 13 to 20 years, except for the Sports Authority
     store, which had a remaining primary term of 11 years.   The
     leases  provide  the tenants with three  to  four  five-year
     renewal options subject to the same terms and conditions  as
     the  primary  term.  The leases contain rent  clauses  which
     entitle  the  Company to receive additional rent  in  future
     years based on stated rent increases.

     The   Company's  properties  are  commercial,  single-tenant
     buildings.  The  Sports Authority store was  constructed  in
     1996,  renovated in 2001 and acquired in 2006.  The  Advance
     Auto  Parts  store was constructed in 2004 and  acquired  in
     2006.   The  Applebee's restaurant in Indianapolis,  Indiana
     was   constructed  in  1997  and  acquired  in  2006.    The
     Applebee's   restaurant  in  Crawfordsville,   Indiana   was
     constructed in 1996 and acquired in 2006.  There  have  been
     no  costs  capitalized  as improvements  subsequent  to  the
     acquisitions.

     The   cost   of   the  properties  and  related  accumulated
     depreciation at December 31, 2006 are as follows:

                                       Buildings and           Accumulated
     Property                   Land     Equipment     Total   Depreciation

Sports Authority,
 Wichita, KS                $  697,617  $1,533,136  $2,230,753  $   42,992
Advance Auto Parts,
 Middletown, OH                112,315     909,974   1,022,289      21,233
Applebee's, Indianapolis, IN   889,340   2,164,847   3,054,187      18,798
Applebee's, Crawfordsville, IN 337,353     900,418   1,237,771           0
                             ----------  ----------  ----------  ----------
                            $2,036,625  $5,508,375  $7,545,000  $   83,023
                             ==========  ==========  ==========  ==========


     During  the second quarter of 2006, the Company purchased  a
     40%  interest  in a Sports Authority (formerly Gart  Sports)
     store  in  Wichita, Kansas for $2,230,753.  The property  is
     leased  to TSA Stores, Inc. under a Lease Agreement  with  a
     remaining  primary term of 11 years and initial annual  rent
     of $186,059.
                             -24-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(4)  Investments in Real Estate - (Continued)

     On  June 1, 2006, the Company purchased a 55% interest in an
     Advance Auto Parts store in Middletown, Ohio for $1,022,289.
     The property is leased to Advance Stores Company, Inc. under
     a  Lease  Agreement with a remaining primary  term  of  13.2
     years and initial annual rent of $71,679.

     On  September 21, 2006, the Company purchased a 37% interest
     in  an  Applebee's restaurant in Indianapolis,  Indiana  for
     $1,130,049.  During the fourth quarter of 2006, the  Company
     purchased  the remaining 63% interest in this  property  for
     $1,924,138.  The property is leased to Apple Indiana II  LLC
     under a Lease Agreement with a primary term of 20 years  and
     initial annual rent of $220,262.

     On  December 29, 2006, the Company purchased a 40%  interest
     in  an Applebee's restaurant in Crawfordsville, Indiana  for
     $1,237,771.  The property is leased to Apple Indiana II  LLC
     under a Lease Agreement with a primary term of 20 years  and
     initial annual rent of $89,289.

     For  properties owned as of December 31, 2006,  the  minimum
     future rent payments required by the leases are as follows:

                       2007           $  582,794
                       2008              585,895
                       2009              585,895
                       2010              585,895
                       2011              591,699
                       Thereafter      7,031,427
                                       ----------
                                      $9,963,605
                                       ==========

     There were no contingent rents recognized in 2006.

                             -25-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(5)  Major Tenants -

     The following schedule presents rent revenue from individual
     tenants,   or  affiliated  groups  of  tenants,   who   each
     contributed  more  than ten percent of the  Company's  total
     rent revenue for the year ended December 31:

            Tenants               Industry          2006

     TSA Stores, Inc.              Retail         $ 129,757
     Apple American Group          Restaurant        47,190
     Advance Stores Company, Inc.  Retail            42,006
                                                   ---------
     Aggregate rent revenue of major tenants      $ 218,953
                                                   =========
     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue                 100%
                                                   =========

(6)  Miscellaneous Income -

     The  Company purchased a 40% interest in a Sports  Authority
     store  in  Wichita, Kansas from an affiliate of the Managing
     Members.   During the period the property was owned  by  the
     affiliate, the property generated net income of $6,199.  The
     Company purchased a 63% interest in an Applebee's restaurant
     in Indianapolis, Indiana and a 40% interest in an Applebee's
     restaurant  in Crawfordsville, Indiana from an affiliate  of
     the Managing Members.  During the period the properties were
     owned by the affiliate, the properties generated a net  loss
     of   $1,616  and  $2,812,  respectively.   Pursuant  to  the
     Operating  Agreement, these amounts were paid to or  charged
     to  the Company and are shown as Miscellaneous Income on the
     Income Statement.

(7)  Members' Capital -

     Cash  distributions  of $5,342 were  made  to  the  Managing
     Members  and  $172,728 were made to the Limited Members  for
     the  year  ended  December 31, 2006.  The  Limited  Members'
     distributions represent $0.38 per LLC Unit outstanding using
     460,607  weighted average Units in 2006.  The  distributions
     represent $0.21 per Unit of Net Income and $0.17 per Unit of
     return of contributed capital in 2006.

     Beginning in April 2009, the Company may acquire Units  from
     Limited  Members  who  have  tendered  their  Units  to  the
     Company.   Such  Units may be acquired at a  discount.   The
     Company  will not be obligated to purchase in any year  more
     than  2% of the total number of Units outstanding on January
     1  of such year.  In no event shall the Company be obligated
     to purchase Units if, in the sole discretion of the Managing
     Member,  such purchase would impair the capital or operation
     of the Company.

                             -26-

                 AEI INCOME & GROWTH FUND 26 LLC
                  NOTES TO FINANCIAL STATEMENTS
                        DECEMBER 31, 2006

(8)  Income Taxes -

     The   following  is  a  reconciliation  of  net  income  for
     financial reporting purposes to income reported for  federal
     income tax purposes for the years ended December 31:

                                                        2006       2005

     Net Income for Financial Reporting Purposes    $  102,013   $     4

     Depreciation for Tax Purposes Under
      Depreciation for Financial Reporting Purposes     32,711         0
                                                     ----------   -------
           Taxable Income to Members                $  134,724   $     4
                                                     ==========   =======


     The  following  is a reconciliation of Members'  Equity  for
     financial reporting purposes to Members' Equity reported for
     federal income tax purposes for the years ended December 31:

                                                          2006        2005

     Members' Equity for Financial Reporting Purposes  $7,439,198  $   1,004

     Depreciation for Tax Purposes Under
      Depreciation for Financial Reporting Purposes        32,711          0

     Organization and Syndication Costs Treated as
      Reduction of Capital for Financial Reporting
      Purposes                                          1,301,525          0
                                                        ----------  ---------
           Members' Equity for Tax Reporting Purposes  $8,773,434  $   1,004
                                                        ==========  =========

(9)  Fair Value of Financial Instruments -

     The estimated fair values of the financial instruments, none
     of  which  are held for trading purposes, are as follows  at
     December 31:

                                   2006                 2005
                          Carrying     Fair    Carrying       Fair
                           Amount     Value     Amount        Value

     Money Market Funds   $151,644  $151,644   $  1,004     $  1,004
                           --------  --------   --------     --------
      Total Cash and
        Cash Equivalents  $151,644  $151,644   $  1,004     $  1,004
                           ========  ========   ========     ========

                             -27-

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Board of Directors:
AEI Fund Management XXI, Inc.
Saint Paul, Minnesota




      We  have audited the accompanying balance sheet of AEI Fund
Management  XXI,  Inc. as of December 31, 2006 and  December  31,
2005.   This  financial  statement is the responsibility  of  the
Company's  management.   Our  responsibility  is  to  express  an
opinion on this financial statement based on our audits.

      We conducted our audits in accordance with the standards of
the  Public  Company Accounting Oversight Board (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  An audit  includes
examining,  on a test basis, evidence supporting the amounts  and
disclosures in the financial statements.  An audit also  includes
assessing   the   accounting  principles  used  and   significant
estimates  made by management, as well as evaluating the  overall
financial  statement presentation.  We believe  that  our  audits
provide a reasonable basis for our opinion.

     In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position  of  AEI
Fund   Management  XXI,  Inc.  as  of  December  31,   2006   and
December  31,  2005,  in conformity with U.S. generally  accepted
accounting principles.



                        /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                                Certified Public Accountants

Minneapolis, Minnesota
March 30, 2007
                             -28-


                  AEI FUND MANAGEMENT XXI, INC.
                          BALANCE SHEET
                           DECEMBER 31




                             ASSETS


                                                            2006        2005

CURRENT ASSETS:
   Cash and Cash Equivalents                            $  36,828  $  61,050
   Distributions Receivable from Real Estate Investments   30,322     24,184
   Receivable from Related Companies                        3,434         55
                                                         ---------  ---------
        Total Current Assets                               70,584     85,289
                                                         ---------  ---------
NONCURRENT ASSETS:
   Real Estate Investments                                 33,112     27,899
                                                         ---------  ---------
             Total Assets                               $ 103,696  $ 113,188
                                                         =========  =========


                     LIABILITIES AND STOCKHOLDER'S EQUITY


NONCURRENT LIABILITIES:
   Deficit in Real Estate Investments                   $  19,460  $  18,020

STOCKHOLDER'S EQUITY:
   Common Stock, Par Value $.01 per Share,
     100,000 Shares authorized,
     1,000 Shares issued and outstanding                       10         10
   Additional Paid-in Capital                                 990        990
   Retained Earnings                                       83,236     94,168
                                                         ---------  ---------
        Total Stockholder's Equity                         84,236     95,168
                                                         ---------  ---------
           Total Liabilities and Stockholder's Equity   $ 103,696  $ 113,188
                                                         =========  =========


 The accompanying notes to Balance Sheet are an integral part of
                         this statement.
                      -29-

                  AEI FUND MANAGEMENT XXI, INC.
                     NOTES TO BALANCE SHEET
                   DECEMBER 31, 2006 AND 2005

(1)  Summary of Organization and Significant Accounting Policies -

     Organization

     AEI  Fund  Management XXI, Inc. (Company)  is  the  Managing
     General  Partner  of AEI Income & Growth  Fund  XXI  Limited
     Partnership  and  AEI  Income &  Growth  Fund  XXII  Limited
     Partnership.   The  Company is the Managing  Member  of  AEI
     Income  &  Growth Fund 23 LLC, AEI Income & Growth  Fund  24
     LLC, AEI Income & Growth Fund 25 LLC and AEI Income & Growth
     Fund  26  LLC.   The  Company operates  as  a  wholly  owned
     subsidiary  of  AEI Capital Corporation  (ACC).   Robert  P.
     Johnson is President of the Company and is the President and
     majority stockholder of ACC.  At December 31, 2006 and 2005,
     the  Company owned 22 Units of AEI Income & Growth Fund XXII
     Limited  Partnership.  Investors in the funds  listed  above
     have no interest in the assets or operations of the Company.

     Financial Statement Presentation

     The  Company accounts for its investments under  the  equity
     method of accounting.  The Company's major source of cash is
     its  share of distributions allocated under the terms of the
     Limited Partnership or Limited Liability Company Agreements.
     The  combined assets, revenues and net income for the  above
     referenced   entities  were  $102,351,723,  $8,765,443   and
     $6,979,656   for   2006  and  $96,340,660,  $7,481,498   and
     $4,022,329  for 2005.  The Company's share of income  (loss)
     ranges from 1% to 2%.  At December 31, 2006 and December 31,
     2005,  the  Company had accumulated deficits of $19,460  and
     $18,020, respectively.  The Company would be responsible  to
     fund  a  deficiency in its capital account,  as  defined  by
     agreement, if the real estate investment terminates.

     Accounting Estimates

     Management uses estimates and assumptions in preparing  this
     balance   sheet   in  accordance  with  generally   accepted
     accounting  principles.   Those  estimates  and  assumptions
     affect  the  reported  amounts of  assets,  liabilities  and
     stockholder's  equity.   Actual results  could  differ  from
     those estimates.

     Cash Equivalents

     The  Company  considers all highly liquid  debt  instruments
     purchased with a maturity of three months or less to be cash
     equivalents.

     Cash Concentrations of Credit Risk

     The   Partnership's  cash  is  deposited  primarily  in  one
     financial  institution and at times during the year  it  may
     exceed FDIC insurance limits.

                             -30-

                  AEI FUND MANAGEMENT XXI, INC.
                     NOTES TO BALANCE SHEET
                   DECEMBER 31, 2006 AND 2005

(2)  Receivable from Related Companies -

     AEI  Fund Management, Inc. (AFM), an affiliated corporation,
     performs the administrative and operating functions  of  the
     Company.    The  receivable  is  non-interest  bearing   and
     unsecured  and  is  to  be  paid in  the  normal  course  of
     business.   At  December 31, 2006 and 2005,  the  receivable
     from AFM was $-0- and $55, respectively.

     In   2006,   AEI  Securities,  Inc.  (ASI),  an   affiliated
     corporation,  acted as the underwriter  of  an  offering  of
     units in a limited liability company of which the Company is
     the  managing  member.  At December 31, 2006, ASI  owed  the
     Company  $3,434  as  a result of this business  arrangement.
     The balance is non-interest bearing and unsecured and is  to
     be paid in the normal course of business.

 (3) Income Taxes -

     The  Company is a qualified subchapter S subsidiary of  ACC.
     As  a  result,  the  income of the  Company  is  treated  as
     belonging  to the parent corporation, ACC.  In  general,  no
     recognition   has  been  given  to  income  taxes   in   the
     accompanying financial statements.

(4)  Fair Value of Financial Instruments -

     The carrying value of financial instruments approximate fair
     value.






                             -31-


                        EXHIBIT B



                  PRIOR PERFORMANCE TABLES


   The information presented in the following tables updates
the  tables  represents the  historical  experience  of  all
public  real  estate  programs organized by  our managers or
their affiliates  during  the periods  indicated. You should
not assume that AEI Fund 26 will  generate  results, or that
you  will  receive   benefits,  comparable  to  the  results
generated by, or benefits received  by  investors  in, these
prior real estate programs.  You will have  no  interest  in
the  assets  or  operations  of  our managers.

   We  have  filed  a registration statement  that  contains
additional  information  about  the  performance  of   prior
programs  in  "Part  II".  You can  obtain  a  copy  of  the
registration statement by contacting Mr. Robert P.  Johnson,
President,  AEI Fund Management XXI, Inc., 1300 Wells  Fargo
Place, 30 East Seventh Street, Saint Paul, Minnesota 55101.

   The  programs  included  in  the  following  tables  have
investment  objectives  similar to those  of  AEI  Fund  26,
including  protection of capital, distribution of  partially
"tax  sheltered"  cash  flow from  operations,  and  capital
appreciation.

  Table              Index Description               Page

     I     Experience in Raising and Investing Funds   B-2
    II     Compensation to Sponsors                    B-3
   III     Operating Results of Prior  Programs        B-4
    IV     Results of Completed Programs               B-7
    V      Sales or Disposals of Properties            B-8

                                B-1


                                TABLE I

                 EXPERIENCE IN RAISING AND INVESTING FUNDS
                                (Unaudited)

   The following table provides information at December 31, 2006, as to the
experience  of  the Managing Members and their Affiliates  in  raising  and
investing  funds with respect to all prior public programs  closed  in  the
last five years.


                                 AEI           AEI            AEI
                               Income &      Income &       Income &
                                Growth        Growth         Growth
                               Fund 23       Fund 24        Fund 25

Dollar Amount Offered        $24,000,000    $50,000,000   $50,000,000
Dollar Amount Raised         $13,349,321    $24,831,283   $42,434,763
Percentage of Amount
 Raised                            100.0%         100.0%        100.0%
Less Offering Expenses:
 Selling Commissions
  and Discount                      10.0           10.0          10.0
 Organizational
  Expenses                           5.0            4.8           4.3
 Other (a)                           2.6            0.0           0.0
 Less Reserves                       0.4            0.2           0.0
                              -----------    -----------   -----------
Percent Available
 for Investment                     82.0%          85.0%         85.7%
                              ===========    ===========   ===========
Acquisition Costs:
 Prepaid Items and
  Fees Related
  to Purchase of
  Property                           0.0%           0.0%          0.0%
 Investment in
  Properties (b)                    82.0           85.0          85.7
 Acquisition Fees                    0.0            0.0           0.0
                              -----------    -----------   -----------
Total Acquisition Cost              82.0%          85.0%         85.7%
                              ===========    ===========   ===========

Percent Leverage                     0.0%           0.0%          0.0%
Date Offering Began               Mar. 99         May 01       May 03
Length of Offering
 (months)                              24             24           24
Months to Invest 90% of
 Amount Available for
 Investment (measured
 from beginning of
 offering)                            28             31            31




(a)   Represents distributions in excess of net cash flow (return  of
      capital).
(b)   Includes  cash down payments and capitalized costs and expenses
      related to  the  purchase  of  properties,  including the  cost
      of  appraisals,   attorney's   fees,  expenses  of personnel in
      investigating  properties,   and  overhead  allocated  to  such
      activities.
                                B-2

                                 TABLE II

                         COMPENSATION TO SPONSORS
                                (Unaudited)

    The following table provides information as to the compensation paid to
the  Managing  Member  and  their Affiliates  during the period from  March
1999  to December 31, 2006 for all prior public programs closed in the last
five years.


                                         AEI          AEI            AEI
                                       Income &     Income &       Income &
                                        Growth       Growth         Growth
                                       Fund 23      Fund 24        Fund 25
Type of Compensation
Date Offering Commenced                 Mar. 99        May 01        May 03
Dollar Amount Raised                $13,349,321   $24,831,283   $42,434,763
Amount Paid to Sponsors
 From Proceeds of Offering:
   Underwriting Fees (a)                271,147       691,268     1,238,471
   Acquisition Expenses
    - purchase option on property             0             0             0
    - real estate commission                  0             0             0
    - expense reimbursement              92,688(c)    158,363(c)    327,819(c)
   Organization Offering Expenses       206,858       668,967     1,219,529
Dollar Amount of Cash
 Generated From
 Operations Before
 Deducting Payments
   to Sponsors                        5,651,632     6,681,848     5,506,261
Amount Paid to Sponsors
 From Operations:
   Property Management
    Fees (b)                                  0             0             0
   Partnership
    Management Fees (b)                       0             0             0
   Reimbursements (b)                 1,067,155     1,078,274       911,032
   Leasing Commissions                        0             0             0
   Participation in Cash Distributions  143,090       168,719       136,757
Dollar Amount of Property
 Sales and Refinancing
 Before Deducting
 Payments to Sponsors:
   - cash                             7,237,446     9,934,397     1,558,106
   - notes                                    0             0             0
Amount Paid to Sponsors
 From Property Sales
 and Refinancing:
   Real Estate
    Commissions (d)                           0             0             0
   Incentive Fees (d)                         0             0             0
   Reimbursements (d)                   190,659       120,614        50,988
   Participation in Cash Distributions    8,735        10,185         3,960

(a)  Does  not  include  fees paid to AEI Securities,  Inc.  which  were
     reallowed to participating dealers. The reallowed fees for Fund 23,
     Fund 24, and Fund 25 totaled $1,055,821, $1,773,560 and $2,977,696,
     respectively.
(b)  Although  not  paid  a  fixed  fee  for  property  management  and
     partnership   management,  the  Managing Members   and  Affiliates
     were reimbursed at their Cost for the provision  of such services.
     Such reimbursements are reflected  under the line   item  "Amount
     Paid  to  Sponsors From Operations-Reimbursements."
(c)  The  Programs  received  reimbursements  from  the  sellers and/or
     tenants in the form of financing fees, commitment fees and expense
     reimbursements to offset these costs.  The reimbursements received
     by Fund 23, Fund   24  and Fund 25 totaled  $266,621, $252,187 and
     $75,341, respectively.
(d)  Although  not  paid a fixed fee from property  sales,  the Managing
     Members   and   Affiliates  were  reimbursed  at their Cost for the
     provision  of   services   related   to   property   sales.    Such
     reimbursements   are  reflected  under  the  line item "Amount Paid
     to Sponsors  From  Property Sales and Refinancing - Reimbursements."

                                B-3
                                 TABLE III

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)

The following table provides information as to the results of all prior
programs closed in the past five years for each year of the five years (or
from inception if formed after January 1, 2002) ended December 31, 2006.



                                                   AEI INCOME & GROWTH FUND 23
                                                       Years Ended December 31

                                                2002         2003         2004         2005         2006
                                                                                
Gross Revenues from Operations              $ 1,063,481  $   880,585  $   943,673   $   691,300  $   834,822
Profit  on Sale of Properties                   362,730    1,079,117            0        88,442            0
Less:
  Operating Expenses                            168,324      174,563      183,937       216,281      145,691
  Depreciation & Amortization                   267,495      175,111      151,844       174,677      210,424
   Real  Estate  Impairment                           0    1,600,393            0             0            0
                                             -----------  -----------  -----------   -----------  -----------
Net  Income (Loss) - GAAP Basis             $   990,392  $     9,635  $   607,892   $   388,784  $   478,707
                                             ===========  ===========  ===========   ===========  ===========
Taxable Income (Loss):
  -from operations                          $   641,442  $   547,981  $   498,390   $   260,838  $   472,281
  -from gain (loss) on sale                     344,446    1,051,952            0      (342,939)           0
                                             ===========  ===========  ===========   ===========  ===========

Cash Generated (Deficiency) From Operations $   939,872  $   697,744  $   791,251   $   466,947  $   629,666
Cash Generated From Sales                     2,178,700    3,679,645            0     1,188,442            0
Cash  Generated  From  Refinancing                    0            0            0             0            0
                                             -----------  -----------  -----------   -----------  -----------
Cash Generated From Operations,
  Sales  and Refinancing                      3,118,572    4,377,389      791,251     1,655,389      629,666
Less: Cash Distributions to Investors
  -from  operating cash flow                    873,962      697,744      347,113       466,947      629,666
  -from  sales and refinancing                   97,727      292,929      482,860             0            0
  -from  cash reserves (a)                            0       63,085            0       254,327       98,855
                                             -----------  -----------  -----------   -----------  -----------
Cash Generated (Deficiency)
   After   Cash  Distributions                2,146,883    3,323,631      (38,722)      934,115      (98,855)
Less: Special Items (Not Including
   Sales  and  Refinancing)                           0            0            0             0            0
                                             -----------  -----------  -----------   -----------  -----------
Cash Generated (Deficiency)
 After Cash Distributions and
 Special Items                              $ 2,146,883  $ 3,323,631  $   (38,722)  $   934,115  $   (98,855)
                                             ===========  ===========  ===========   ===========  ===========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
       -from  operations                             47           40           36            19           35
       -from  recapture                               5            4            0             0            0
    Capital  Gain  (Loss)                            19           74            0           (26)           0
  Cash Distributions to Investors:
   Source (on GAAP basis)
       -Investment  Income                           71            1           44            26           35
       -Return  of  Capital                           0           77           17            27           18
  Cash Distributions to Investors:
   Source (on cash basis)
       -Sales                                         7           22           36             0            0
       -Refinancing                                   0            0            0             0            0
       -Operations                                   64           51           25            34           46
       -Cash  Reserves  (a)                           0            5            0            19            7
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                                                                   100%

(a)  Represents initial capital or cash retained from
     prior years' cash flow.
(b)  Based on an investment of a weighted average Unit
     outstanding.
                        B-4
                           TABLE III (Continued)

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)


                                              AEI INCOME & GROWTH FUND 24
                                               Years  Ended December  31

                                                2002         2003         2004       2005          2006
                                                                              
Gross  Revenues from Operations             $  537,720  $ 1,436,722 $ 1,700,553  $ 1,794,147  $ 1,801,279
Profit on Sale of Properties                         0      703,102     130,829        1,082      574,681
Less:
 Operating Expenses                            164,203      244,633     538,918      457,144      289,876
 Depreciation                                  101,688      336,661     465,163      488,447      431,250
 Real Estate Impairment                              0            0     434,065      356,000            0
                                             ----------  ----------  -----------  -----------  -----------
Net Income (Loss) - GAAP Basis              $  271,829  $ 1,558,530 $   393,236  $   493,638  $ 1,654,834
                                             ==========  ==========  ===========  ===========  ===========
Taxable Income (Loss):
 -from operations                           $  290,954  $   938,856 $ 1,163,904  $ 1,181,923  $   634,580
 -from gain (loss) on sale                           0      661,553     121,430     (772,824)     450,018
                                             ==========  ==========  ===========  ===========  ===========

Cash Generated (Deficiency) From Operations $  364,271  $ 1,208,879 $ 1,086,520  $ 1,407,079  $ 1,488,080
Cash Generated From Sales                            0    3,155,310     509,345      995,082    5,154,046
Cash Generated From Refinancing                      0            0           0            0            0
                                             ----------  ----------  -----------  -----------  -----------
Cash Generated From Operations,
  Sales  and Refinancing                       364,271    4,364,189   1,595,865    2,402,161    6,642,126
Less: Cash Distributions to Investors
 -from operating cash flow                     267,186      694,545   1,086,520    1,350,060    1,486,894
 -from sales and refinancing                         0      281,111     333,333      323,232       80,808
 -from cash reserves (a)                             0            0     360,452            0            0
                                             ----------  ----------  -----------  -----------  -----------
Cash Generated (Deficiency)
  After  Cash Distributions                     97,085    3,388,533    (184,440)     728,869    5,074,424
Less: Special Items (Not Including
 Sales and Refinancing)                              0            0           0            0            0
                                             ----------  ----------  -----------  -----------  -----------
Cash Generated (Deficiency)
 After Cash Distributions and
  Special  Items                            $   97,085  $ 3,388,533 $  (184,440) $   728,869  $ 5,074,424
                                             ==========  ==========  ==========   ===========  ===========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
     -from operations                               31           42           45          46           25
     -from recapture                                 0            9            0           0            2
   Capital Gain (Loss)                               0           21            5         (31)          15
  Cash Distributions to Investors:
   Source (on GAAP basis)
     -Investment Income                             29           44           14          19           61
     -Return of Capital                              0            0           55          47            0
  Cash Distributions to Investors:
   Source (on cash basis)
     -Sales                                          0           13           13          13            3
     -Refinancing                                    0            0            0           0            0
     -Operations                                    29           31           42          53           58
     -Cash Reserves (a)                              0            0           14           0            0
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                                                                 99%

(a) Represents initial capital or cash retained from
    prior years' cash flow.
(b) Based on an investment of a weighted average Unit
    outstanding.

                           B-5

                           TABLE III (Continued)

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)


                                           AEI INCOME & GROWTH FUND 25
                                            Years  Ended December  31

                                                2003        2004      2005          2006
                                                                    
Gross  Revenues from Operations             $  66,069  $  773,695   $1,995,808   $2,773,196
Profit on Sale of Properties                        0           0      434,154            0
Less:
 Operating Expenses                            18,772     161,429      412,656      420,682
 Depreciation                                   4,108     189,655      546,189      939,138
 Real Estate Impairment                             0           0            0            0
                                             ---------   ---------   ----------   ----------
Net Income (Loss) - GAAP Basis              $  43,189   $ 422,611   $1,471,117   $1,413,376
                                             =========   =========   ==========   ==========
Taxable Income (Loss):
 -from  operations                          $  54,486   $ 469,399   $1,210,839   $1,692,337
 -from gain on sale                                 0           0      421,848            0
                                             =========   =========   ==========   ==========

Cash Generated (Deficiency) From Operations $  93,292   $ 733,149   $1,693,608   $2,139,229
Cash Generated From Sales                           0           0    1,507,118            0
Cash Generated From Refinancing                     0           0            0            0
                                             ---------   ---------   ----------   ----------
Cash Generated From Operations,
  Sales  and Refinancing                       93,292     733,149    3,200,726    2,139,229
Less: Cash Distributions to Investors
 -from operating cash flow                      5,135     463,742    1,155,378    2,139,229
 -from sales and refinancing                        0           0      338,384       57,576
 -from cash reserves (a)                            0           0            0      140,142
                                             ---------   ---------   ----------   ----------
Cash Generated (Deficiency)
  After  Cash Distributions                    88,157     269,407    1,706,964     (197,718)
Less: Special Items (Not Including
 Sales and Refinancing)                             0           0           0             0
                                             ---------   ---------   ----------   ----------
Cash Generated (Deficiency)
 After Cash Distributions and
  Special  Items                            $  88,157   $ 269,407   $1,706,964   $ (197,718)
                                             =========   =========   ==========   ==========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
     -from operations                              12          29           30           39
     -from recapture                                0           0            0            0
   Capital Gain (Loss)                              0           0           10            0
  Cash Distributions to Investors:
   Source (on GAAP basis)
     -Investment Income                             1          26           37           32
     -Return of Capital                             0           3            0           21
  Cash Distributions to Investors:
   Source (on cash basis)
     -Sales                                         0           0            8            1
     -Refinancing                                   0           0            0            0
     -Operations                                    1          29           29           49
     -Cash Reserves (a)                             0           0            0            3
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                                                  100%

(a) Represents initial capital or cash retained from
    prior years' cash flow.
(b) Based on an investment of a weighted average Unit
    outstanding.

                           B-6



                                 TABLE IV

                       RESULTS OF COMPLETED PROGRAMS
                                (Unaudited)

     The following table provides the results of all programs that
have completed operations (no longer hold properties) within the five
years ended December 31, 2006.






                             AEI Real      AEI Real      AEI Real   AEI Real      AEI Real
                              Estate        Estate        Estate     Estate        Estate
                           Fund 85-A(a)  Fund 85-B(b)  Fund 86-A(c) Fund XV(d)    Fund XVI(e)
                                                                  
Dollar Amount Raised         $7,500,000  $7,500,000    $7,500,000   $7,500,000    $15,000,000
Number of Properties Purchased       15          11            11           16             24
Date of Closing of Offering     Jun. 85     Feb. 86       Jul. 86      Dec. 86        Nov. 87
Date of First Sale of Property  Sep. 93     Aug. 89       Aug. 89      Jul. 94        Aug. 89
Date of Final Sale of Property  Aug. 03     Apr. 05       Jun. 04      Nov. 06        May  04
Tax and Distribution Data Per
 $1,000 Investment:
Federal Income Tax Results:
 Ordinary Income (Loss)
  -from operations                  792         663           771        1,033            617
  -from recapture                    49           2             5          119             20
 Capital Gain (Loss)                500         334           296          462            132
 Deferred Gain
  Capital                             0           0             0            0              0
  Ordinary                            0           0             0            0              0
Cash Distributions to Investors
 Source (on GAAP basis)
  -Investment Income              1,146       1,015           990        1,483            786
  -Return of Capital              1,068         858           943          993            854
 Source (on cash basis)
  -Sales                          1,059         863           925        1,134            829
  -Refinancing                        0           0             0            0              0
  -Operations                     1,155       1,010         1,008        1,342            811
  -Other                              0           0             0            0              0


(a)Final sale of property was completed August 15, 2003.
(b)Final sale of property was completed April 5, 2005.
(c)Final sale of property was completed June 1, 2004.
(d)Final sale of property was completed November 21, 2006.
(e)Final sale of property was completed May 25, 2004.

                                B-7

                                     TABLE V

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)

   The following table provides information with respect to sales or disposals
of property by prior programs during the three years ended December 31, 2006.


                                SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Real Estate Cheddar's
Fund XVIII      Clive, IA        Jan.91 Jan.04 2,131,025    0           0        0  2,131,025   0  1,392,249   1,392,249  2,607,617

AEI Real Estate Johnny Carino's
Fund XV         Pharr, TX(c)     Sep.03 Jan.04 2,274,068    0           0        0  2,274,068   0  1,780,398   1,780,398     90,415

AEI Income &    Hollywood Video
Growth          Muscle Shoals,
Fund XXII       AL(c)            Aug.99 Jan.04   668,266    0           0        0    668,266   0    579,370     579,370    236,858

AEI Income &    Winn-Dixie
Growth Fund XXI Panama City,FL(c)Sep.03 Jan.04   874,236    0           0        0    874,236   0    745,138     745,138     16,947

AEI Income &    Garden Ridge
Growth Fund XXI Pineville, NC(b) Mar.96 Jan.04   392,836    0           0        0    392,836   0    334,228     334,228    281,487

AEI Income &    Tia's Tex-Mex
Growth          Killeen,               Jan.04 to
Fund XXII       TX(c)            Dec.03 Feb.04 1,330,280    0           0        0  1,330,280   0  1,041,935   1,041,935     15,134

AEI Income &    Children's World
Growth          Round Lake Beach,      Jan.04 to
Fund 24         IL(c)            Nov.01  Feb.04   509,345    0           0        0    509,345   0    405,299     405,299     91,857

AEI Real Estate Jiffy Lube
Fund XVI        Dallas, TX(d)    Dec.87 Feb.04    80,825    0           0        0     80,825   0    154,892     154,892    329,678

AEI Real Estate Jiffy Lube
Fund XVII       Dallas, TX(d)    Mar.88 Feb.04   242,485    0           0        0    242,485   0    454,624     454,624    945,220

AEI Real Estate Children's World
Fund XVII       Palatine, IL     Sep.89 Apr.04 1,298,032    0           0        0  1,298,032   0    801,098     801,098  1,350,942

                        B-8

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Cheddar's
FUnd XVII       Davenport, IA    Nov.91 Apr.04 2,527,592    0           0        0  2,527,592   0  1,530,934   1,530,934  2,874,252

AEI Real        Children's World
Estate          Sterling Heights,
Fund 85-B       MI(e)            Nov.87 May.04   184,008    0           0        0    184,008   0    143,392     143,392    324,762

AEI Real        Children's World
Estate          Sterling Heights,
Fund XVI        MI(e)            Nov.87 May.04   941,543    0           0        0    941,543   0    729,486     729,486  1,669,253

AEI Real Estate Delisi's
Fund 86-A       Brooklyn Park,MN Jun.87 Jun.04   712,331    0           0        0    712,331   0    968,958     968,958  1,049,238

AEI Real        Arby's
Estate          Colorado Springs,
Fund 85-B       Co               Mar.87 Jun.04   138,113    0           0        0    138,113   0    447,176     447,176    615,011

AEI Real Estate Children's World
Fund XVII       Chino, CA        Sep.89 Sep.04 1,631,193    0           0        0  1,631,193   0  1,305,518   1,305,518  2,331,370

AEI Income &    Johnny Carino's
Growth Fund XXI Farmington, NM   May 03 Oct.04 2,893,779    0           0        0  2,893,779   0  2,183,344   2,183,344    360,011

AEI Real Estate Applebee's
Fund XVII       Ashland, OH      Apr.04 Oct.04 2,290,043    0           0        0  2,290,043   0  1,959,272   1,959,272     69,001

AEI Net Lease   Applebee's
I & G Fund XIX  Aurora, CO(b)    Dec.92 Nov.04    77,724    0           0        0     77,724   0     44,782      44,782     75,771

AEI Real Estate Champps
Fund XVII       Utica, MI(b)     Feb.02 Dec.04   411,252    0           0        0    411,252   0    230,029      230,029    78,416

                        B-9

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Raazoo's
Fund XVIII      Alpharetta, GA(f)Jul.01 Mar.05   648,425    0           0        0    648,425   0    895,503      895,503   337,648

AEI Net Lease   Razzoo's
I & G Fund XIX  Alpharetta, GA(f)Jul.01 Mar.05   432,160    0           0        0    432,160   0    598,109      598,109   225,275

AEI Income &    Razzoo's
Growth Fund 23  Alpharetta, GA(f)Jul.01 Mar.05 1,188,442    0           0        0  1,188,442   0  1,648,036    1,648,036   619,096

AEI Real Estate Arby's                  Jan.05 to
Fund 85-B       Jackson, TN(c)   Oct.86 Apr.05 1,532,926    0           0        0  1,532,926   0    752,971      752,971 1,926,790

AEI Real Estate Children's World        Jan.05
Fund XVII       St. Louis, MO(c) Sep.89 May 05 1,540,436    0           0        0  1,540,436   0    950,627      950,627 1,734,508

AEI Real Estate Applebee's
Fund XVIII      Destin, FL(b)    Nov.91 May 05   109,804    0           0        0    109,804   0     65,215       65,215   122,150

AEI Real Estate Johnny Carino's         Mar.05 to
Fund XVII       Mansfield, TX(c) Sep.03 Jun.05 1,460,795    0           0        0  1,460,795   0  1,028,885    1,028,885   185,753

AEI Real Estate Children's World
Fund XVII       Merrimack, NH    Sep.89 Jul.05 1,253,115    0           0        0  1,253,115   0  1,159,242    1,159,242 2,163,255

AEI Real Estate Champp's                Feb.05 to
Fund XVII       Utica, MI(c)     Feb.02 Aug.05 1,300,705    0           0        0  1,300,705   0    731,618      731,618   258,571

AEI Real Estate Johnny Carino's         Aug.05 to
Fund XVIII      Mansfield, TX(c) Sep.03 Sep.05 1,490,853    0           0        0  1,490,853   0  1,028,886    1,028,886   221,541

AEI Real Estate Arby's
Fund XV         Marshall, MI     Jul.87 Sep.05   589,921    0           0        0    589,921   0    586,425      586,425   620,238

                        B-10

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Old Country Buffet
Fund XVIII      North Lake, IL   Dec.98 Oct.05 1,973,839    0           0        0  1,973,839   0  1,350,804    1,350,804   926,927

AEI Real Estate Eckerd                  Feb.05 to
Fund XVII       Cicero, NY(c)    Nov.03 Nov.05 1,918,485    0           0        0  1,918,485   0  1,586,183    1,586,183   168,650

AEI Real Estate Applebee's
Fund XVIII      Stow, OH(g)      Apr.04 Nov.05 1,835,784    0           0        0  1,835,784   0  1,575,755    1,575,755   182,127

AEI Net Lease   Applebee's
I & G Fund XIX  Stow, OH(g)      Apr.04 Nov.05 1,835,784    0           0        0  1,835,784   0  1,575,755    1,575,755   182,141

AEI Income &    Pancho's
Growth Fund 24  Round Rock, TX   Aug.03 Nov.05   995,082    0           0        0    995,082   0  1,809,513    1,809,513  (415,064)

AEI Net Lease   Eckerd                  Sept. 05 to
I & G Fund XX   Cicero, NY(c)    Nov.03 Dec.05 1,354,440    0           0        0  1,354,440   0  1,093,273    1,093,273   162,288

AEI Real Estate Johnny Carino's         Oct.05 to
Fund XVII       Longview,TX(c)   Nov.03 Dec.05 1,631,255    0           0        0  1,631,255   0  1,179,878    1,179,878   216,761

AEI Net Lease   Johnny Carino's         Oct.05 to
I & G Fund XIX  Longview, TX(c)  Nov.03 Dec.05   758,149    0           0        0    758,149   0    546,069      546,069    99,965

AEI Income &    Mimi's Cafe
Growth Fund 25  Kansas City,MO(c)Jun.04 Dec.05 1,507,118    0           0        0  1,507,118   0  1,110,561    1,110,561   165,261

AEI Real Estate Taco Cabana
Fund XVIII      San Antonio, TX  Dec.90 Jan.06 1,642,624    0           0        0  1,642,624   0  1,406,426    1,406,426 3,083,604

AEI Net Lease   Johnny Carino's         Feb.06 to
I & G Fund XIX  Longview, TX(c)  Nov.03 Mar.06   860,603    0           0        0    860,603   0    633,809      633,809   130,497

                        B-11

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Children's World
Fund XVI        Franconia, VA    Mar.87 May 06 1,829,853    0           0        0  1,829,853   0    962,069      962,069 2,570,411

AEI Income &    Tumbleweed
Growth          Ft. Wayne,
Fund XXII       IN               Aug.99 May 06   997,272    0        164,000     0  1,161,272   0  1,316,695    1,316,695   952,244

AEI Income &    Champps
Growth Fund 24  Houston,TX       Dec.02 May 06 3,147,170    0           0        0  3,147,170   0  3,106,301    3,106,301 1,143,837

AEI Net Lease   Eckerd                  Apr.06 to
I & G Fund XX   Cicero, NY(c)    Nov.03 Aug.06   578,025    0           0        0    578,025   0    492,910      492,910   101,028

AEI Real Estate Children's World
Fund XVIII      Lenexa, KS       Sep.90 Aug.06   849,224    0           0        0    849,224   0    983,527      983,527 1,896,752

AEI Real Estate Eckerd
Fund XVIII      Auburn, NY(b)    May 04 Aug.06   376,203    0           0        0    376,203   0    314,206      314,206    58,122

AEI Real Estate Jared Jewelry           Jun.06 to
Fund XVIII      Lakewood, CO(c)  Feb.04 Oct.06 2,382,658    0           0        0  2,382,658   0  2,017,633    2,017,633   384,860

AEI Net Lease   Jared Jewelry           Aug.06
I & G Fund XIX  Lakewood, CO(c)  Feb.04 Oct.06 2,166,911    0           0        0  2,166,911   0  1,824,522    1,824,522   368,737

AEI Real Estate Garden Ridge
Fund XVIII      Woodlands, TX(h) Aug.03 Nov.06 2,094,119    0           0        0  2,094,119   0  1,995,850    1,995,850   561,088

AEI Income &    Garden Ridge
Growth          Woodlands
Fund XXII       TX(h)            Aug.03 Nov.06 2,792,170    0           0        0  2,792,170   0  2,661,132    2,661,132   748,129

AEI Income &    Garden Ridge
Growth Fund 24  Woodlands,TX(h)  Aug.03 Nov.06 2,006,876    0           0        0  2,006,876   0  1,912,690    1,912,690   529,461

                        B-12

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS               COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                             CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Razzoo's
Fund XV         Austin, TX(i)    Jun.01 Nov.06   385,412    0           0        0    385,412   0    714,689      714,689   479,160

AEI Real Estate Razzoo's
Fund XVII       Austin, TX(i)    Jun.01 Nov.06   297,816    0           0        0    297,816   0    545,266      545,266   370,822

AEI Net Lease   Razzoo's
I & G Fund XIX  Austin, TX(i)    Jun.01 Nov.06   227,742    0           0        0    227,742   0    417,939      417,939   283,871

AEI Income &    Razzoo's
Growth          Austin,
Fund XXII       TX (i)           Jun.01 Nov.06   840,892    0           0        0    840,892   0  1,544,214    1,544,214 1,048,138

AEI Income &    Eckerd                  Apr.06 to
Growth Fund XXI Utica, NY(c)     Sep.04 Dec.06 1,635,645    0           0        0  1,635,645   0  1,384,963    1,384,963   198,754

AEI Income &    Children's World        Jun.06 to
Growth Fund XXI Kimberly, WI(c)  Jun.02 Dec.06 1,414,328    0           0        0  1,414,328   0  1,011,582    1,011,582   403,755

AEI Income &    Children's World
Growth          Abingdon,
Fund XXII       MD               Jul.99 Dec.06 1,460,899    0           0        0  1,460,899   0  1,051,722    1,051,772   681,643


(a)  Does not include deduction for partnership general and
     administrative expenses not related to the properties.
(b)  Represents the sale of a single tenant-in-common
     property interest to a third party.
(c)  Represents multiple sales of tenant-in-common property
     interest to various third parties during the period
     listed.
(d)  This property was owned jointly by AEI Real Estate Fund
     XVI and AEI Real Estate Fund XVII.
(e)  This property was owned jointly by AEI Real Estate Fund
     85-B abd AEI Real Estate Fund XVI.
(f)  This property was owned jointly by AEI Real Estate Fund
     XVIII, AEI Net Lease Income & Growth Fund XIX and AEI
     Income & Growth Fund 23.
(g)  This property was owned jointly by AEI Real Estate Fund
     XVIII & AEI Net Lease Income & Growth Fund XIX.
(h)  This property was owned jointly by AEI Real Estate Fund
     XVIII, AEI Income & Growth Fund XXII and AEI Income &
     Growth Fund 24.
(i)  This property was owned jointly by AEI Real Estate Fund
     XV, AEI Real Estate Fund XVII, AEI Net Lease Income &
     Growth Fund XIX and AEI Income & Growth Fund XXII.



                        B-13



                      AEI INCOME & GROWTH FUND 26

            AN OFFERING OF LIMITED LIABILITY COMPANY UNITS
                          $1,500,000 minimum
                         $100,000,000 maximum
     AEI Income & Growth Fund 26 LLC is a newly formed limited
liability company that will acquire commercial properties net leased
to creditworthy corporate tenants. Our long-term "net" leases will
require the tenants to pay the operating expenses of our properties,
including taxes, maintenance and insurance. Although we have not
commenced operations, we intend to use the cash raised in this
offering to acquire properties in this manner.

 SECURITIES OFFERED  10,000,000 units of limited liability
                     company interest at $10.00 per unit up to a maximum
                     of $100,000,000, including up to approximately
                     300,000 units through our distribution reinvestment
                     plan.
 MINIMUM PURCHASE    500 units for $5,000.
 MINIMUM OFFERING    All subscription proceeds will be placed
                     in a special bank escrow until at least $1,500,000
                     has been received. We will promptly return to
                     investors all subscriptions held in escrow if we do
                     not raise $1,500,000 by  , 2006.
 OFFERING PERIOD     The offering will be open until     ,
                     2006, but we may extend it to           , 2007.
 DEALER MANAGER      AEI Securities, Inc., a company affiliated with our
                     managers, will act as "Dealer Manager" and coordinate
                     the sale of units. AEI Securities will contract with
                     other broker dealers that are members of the NASD to
                     use their "commercially reasonable efforts" to offer
                     and sell the units.

 PROCEEDS TO AEI FUND 26         Minimum                    Maximum

                       Per Unit  Dollars  Percent Per Unit  Dollars    Percent
 Public price           $10.00 $1,500,000 100.0%   $10.00 $100,000,000 100.00%
 Commissions & expenses   1.05    157,500  10.5%     1.01   10,100,000  10.10%
 Other offering expenses  0.45     67,500   4.5%     0.27    2,700,000   2.70%
 Proceeds to AEI Fund 26  8.50  1,275,000  85.0%     8.72   87,200,000  87.20%
 Acquisition expenses     0.17     25,500   1.7%     0.15    1,550,000   1.55%
 Working capital reserve  0.05      7,500   0.5%     0.05      500,000   0.50%
 Amount available for
 purchase of properties $ 8.28  $1,242,000 82.8%   $ 8.52  $85,150,000  85.15%

   Commissions & Expenses include commissions of 6.5%, a nonaccountable
   expense allowance of 3.5%, and a due diligence expense allowance of
   up to 0.5%.  This assumes we pay the maximum commissions and
   nonaccountable expenses.  We will not pay commissions and expenses
   on purchases through our distribution reinvestment plan.

WE ENCOURAGE YOU TO READ THE "RISKS" DESCRIBED ON PAGES 6 TO 11 OF
THIS PROSPECTUS. WE BELIEVE THE MOST SIGNIFICANT RISKS INCLUDE THE
FOLLOWING:

     You  will not be able to evaluate properties before  they  are
     acquired.

     You will be required to rely upon our managers for all facets of
     our operations, including selection, management and sale of our
     properties.

     As an investor, you will have the right to vote upon only a
     limited number of matters.

     We will make substantial payments to our managers regardless of
     whether we are profitable.

     We may only purchase one property if only the minimum
     ($1,500,000) is raised.

     Because there will be no market for the units, and because
     restrictions will be placed upon their transfer, you may be unable to
     resell your units except at a substantial discount from your purchase
     price.

     Our managers will operate under a number of conflicts of
     interest.

     We are not a mutual fund or investment company and are not
     regulated under the federal Investment Company Act.

NEITHER THE SEC NOR ANY STATE SECURITIES ADMINISTRATOR HAS APPROVED
THE UNITS OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE AND COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. WE CANNOT
USE PROJECTIONS IN THIS OFFERING AND WE CANNOT MAKE ANY
REPRESENTATION, VERBALLY OR IN WRITING, ABOUT THE CASH OR TAX BENEFITS
YOU MIGHT RECEIVE FROM INVESTING. WE CANNOT ACCEPT YOUR SUBSCRIPTION
FOR UNITS UNTIL AT LEAST FIVE BUSINESS DAYS AFTER YOU HAVE RECEIVED
THIS PROSPECTUS.


                         AEI SECURITIES, INC.
  1300 Wells Fargo Place, 30 Seventh Street East, St. Paul, MN 55101
                    800-328-3519  www.aeifunds.com
                                     , 2005


                           WHO MAY INVEST

     To purchase units you must represent in the subscription
agreement attached as Exhibit C that you have received this
prospectus and that you meet the following financial suitability
requirements.
                Financial Standards You Must Meet
                NET WORTH   OR       NET WORTH          INVESTMENT AS
 STATE IN      (exclusive          (exclusive of        PERCENTAGE OF
 WHICH YOU       of home              home and            NET WORTH
  RESIDE           and             automobile) PLUS
               automobile)           ANNUAL GROSS
                                      INCOME

All except      $150,000    OR   $45,000 Net Worth            NA
    as                              PLUS $45,000
 indicated                       Annual Gross Income
   below

 Arizona,       $225,000    OR   $60,000 Net Worth            NA
California,                         PLUS $60,000
Iowa, Maine                      Annual Gross Income
Michigan,
Missouri,
North Carolina,
    or
Pennsylvania

 Kansas or      $250,000    OR   $70,000 Net Worth    10% (liquid net worth)
   Ohio                            PLUS $70,000
                                 Annual Gross Income

 Nebraska       $225,000    OR   $60,000 Net Worth            10%
                                    PLUS $60,000
                                 Annual Gross Income


     If you are purchasing through a trust, IRA or other fiduciary
account, these standards must be met by the beneficiary, the trust or
other fiduciary account itself, or by the trust donor or grantor if
they are a fiduciary and directly or indirectly supply the funds for
the purchase.

     You will be required to purchase a minimum of five hundred units
($5,000). An investment in AEI Fund 26 will not create an IRA or
other tax-qualified plan for any investor.

     Because of the lack of a public market, the restrictions on
resale of the units, and the tax characteristics of an investment in
the units, you should not purchase units if you need liquidity and
unless you are willing to make a long-term investment and have income
that allows you to take advantage of the tax characteristics of AEI
Fund 26. Investment firms that participate in the distribution of the
units and solicit orders for units are required to make every
reasonable effort to determine that the purchase is appropriate for
each investor. In addition to net worth and income standards, the
investment firms are required to determine:

     whether you can reasonably benefit from an investment in the
     units based on your investment objectives;

     your ability to bear the risk of the investment; and

     your understanding of the risks of the investment, including the
     risk that you may lose some or all of the investment.

  They must also determine whether you understand:

      the lack of liquidity of the units;

      the restrictions on transferability of the units;

      the background and qualifications of our managers; and

      the tax consequences of the investment.

     In addition to other considerations, trustees and custodians of
tax-qualified plans should consider the diversification requirements
of ERISA in light of the nature of an investment in, and the
compensation structure of, the investment and the potential lack of
liquidity of the units. The prudence of a particular investment must
be determined by the responsible fiduciary taking into account all
the facts and circumstances of the tax-qualified retirement plan and
the investment.
                       2

                          TABLE OF CONTENTS


          Who May Invest                             Page 2
          Summary                                    Page 4
          Risk Factors                               Page 8
          Capitalization                             Page 13
          Estimated Use of Proceeds                  Page 13
          Investment Objectives and Policies         Page 14
          The Properties                             Page 18
          Managers                                   Page 21
          Prior Performance                          Page 25
          Compensation to Managers and Affiliates    Page 28
          Conflicts of Interest                      Page 29
          Cash Distributions and Tax Allocations     Page 32
          Federal Income Tax Considerations          Page 33
          Restrictions on Transfer                   Page 37
          Summary of Operating Agreement             Page 37
          Reports to Investors                       Page 42
          Plan of Distribution                       Page 43
          Sales Materials                            Page 45
          Legal Proceedings                          Page 45
          Experts                                    Page 45
          Legal Opinion                              Page 45
          Financial Statements                       Page 46
          Operating Agreement                        Exhibit A
          Prior Performance Tables                   Exhibit B
          Subscription Agreement                     Exhibit C


                       3

                               SUMMARY

AEI FUND 26

     AEI Income & Growth Fund 26 LLC is a limited liability company
organized on March 14, 2005. Although we have not commenced
operations, we intend to use the proceeds from this offering to
acquire a portfolio of income-producing, net leased commercial
properties. We will lease these properties under long-term "net"
leases that, will generally, require our tenants to pay the operating
expenses of the properties. We will operate from the offices of our
managers at 1300 Wells Fargo Place, 30 East 7th Street, Saint Paul,
Minnesota 55101. Our phone numbers are: (651) 227-7333 (toll-free 800-
328-3519).

     Our investment and business objectives are to acquire properties
that provide:

      regular rental income;

      stable performance from long-term leases with creditworthy
      corporate tenants;

      growth in distributable income through rent escalations;

      capital growth through appreciation in property values; and

      "passive" income that can be offset by passive losses from other
       investments for tax purposes.

     To achieve these objectives we may, from time to time, sell
properties and reinvest the proceeds in replacement properties. We
cannot assure you that we will achieve these objectives. AEI Fund 26
is not a "tax shelter" and is not intended to shelter any of your
taxable income from other sources.

     We will continue to offer units for twelve months after the date
of this prospectus. At the election of our managers, and provided we
have received subscriptions for the minimum 150,000 units within the
first 12 months of the offering, we may offer units during a second
12-month period. Our managers are continually investigating potential
property acquisitions and will engage in acquisition evaluation
throughout the offering period.  We are required to commit to invest
substantially all of the offering proceeds, or return the uninvested
portion to investors, within 12 months after this offering is
completed.

     Our operating agreement requires that the existence of AEI Fund
26 terminate in 2055. It is the intention of our managers, however,
to liquidate our properties and dissolve AEI Fund 26 ten to twelve
years after we complete all of our property acquisitions. Investors
may also dissolve AEI Fund 26 earlier by majority vote.

RISKS

An investment in the units involves a number of risks, including
risks related to:

     your inability to evaluate our properties prior to purchase;

     the total reliance you must place upon our managers for our
     operations;

     your inability to exercise significant voting rights;

     substantial payments we will make to our managers;

     our inability to diversify our assets if only the minimum amount
     of capital is raised;

     the illiquidity of the units;

     the discount at which any repurchase of units may occur; and

     potential management conflicts of interest.

These and other risks are described under "Risk Factors" starting on
Page 8.

PROPERTIES AND PROPERTY ACQUISITION

     Most of the properties we acquire will be leased to corporate
tenants in the chain restaurant and retail segments of the real
estate market. We may, however, acquire properties in other segments
of the real estate market. The properties will be subject to long-
term leases (typically 15 to 20 years) with the corporate tenants at,
or prior to, the time we purchase them.

                       4

     We will acquire all of our properties for cash: we will not use
any debt financing to acquire properties. If our managers believe it
is advantageous to diversify our portfolio, or if we do not have
adequate funds to acquire all of a property, we may acquire
properties jointly with other real estate programs sponsored by
affiliates of our managers, provided that the other programs and
their acquisition terms meet the requirements described under the
caption "Investment Objectives and Policies-Joint Venture
Investments" of this prospectus.

     We expect many of the properties we acquire will be newly
constructed, although we may acquire existing properties. For some
corporate tenants, we may purchase properties prior to construction
of the improvements (buildings and site work) if a potential tenant
assumes the construction risk. If we purchase land prior to
completion of improvements, we will own the improvements as they are
being constructed.

     Although we did not own any properties when this prospectus was
written, we will supplement this prospectus when we have identified
any property we intend to purchase.

THE UNITS

     Each unit of limited liability company interest represents a
$10.00 equity interest in AEI Fund 26. Unlike profits and losses from
a corporation, which are taxed at the corporate level, profits,
gains, losses and tax deductions from AEI Fund 26 are designed to be
passed directly through to the investors and be taxed only once, at
the investor level. The rental income we generate will normally be
treated as passive income for tax purposes.

     We expect to generate non-cash depreciation and amortization
expenses that we should be able to deduct over a period of
approximately 39 years on a straight line basis for tax purposes.
These non-cash deductions should reduce our taxable income in the
early years and allow us to make cash distributions in excess of the
taxable income allocated to our investors. However, this deferred
income will likely be recognized for tax purposes in later years when
we sell properties. There are risks to our ability to achieve these
tax objectives described in the "Federal Income Tax Considerations"
section of this prospectus.

     As an investor and "limited member" of AEI Fund 26, you will
have a different interest in our profits, losses and distributions
than our managers. In addition, any cash you receive from rents will
be allocated and paid in proportions that are different than the cash
you might receive from sale or refinancing. Cash distributions will
be made as follows:

  1. After deducting operating expenses, rent and other operating
     income will be paid 97% to investors and 3% to managers.

  2. After provision for reserves and operating expenses, cash from
     the sale of properties will be paid 99% to investors and 1% to
     managers. After our investors have received both (i) total cash
     distributions from property sales equal to their initial
     investment, plus (ii) a 6.5% annual, uncompounded return on
     their investment (whether from gains on property sales or rental
     income), 90% of the cash from the sale or refinancing of our
     properties will be paid to investors and 10% will be paid to
     managers.

     We will make quarterly distributions of available cash from
interest income, rents, and proceeds from property sales and we
anticipate that distributions will commence the first full quarter
after proceeds are released from escrow, which must occur before
, 2006. Because we expect that the interest income we earn on
offering proceeds will be less than the rental income we earn on
properties, we expect that distributions per unit in the early years
of the Company's operations will be lower than distributions per unit
after the proceeds are invested in properties.

THE MANAGERS AND PRIOR PROGRAMS

     This investment program will be managed by AEI Fund Management
XXI, Inc., a Minnesota corporation that has no full time employees.
AEI Fund Management, Inc., an affiliated asset management company,
will provide the management services on behalf of AEI Fund Management
XXI. Robert P. Johnson, President, CEO, director of AEI Fund
Management XXI and AEI Fund Management, will serve as special
managing member and will be responsible for overseeing the corporate

                       5

manager's activities. Mr. Johnson is also the sole shareholder of AEI
Fund Management and the majority shareholder of AEI Capital
Corporation, which is the sole shareholder of AEI Fund Management XXI
and AEI Securities.

     The sponsors are using AEI Fund Management XXI as our managing
member, rather than AEI Fund Management, which provides most of our
services, because AEI Fund Management XXI is an S corporation that
produces more efficient tax consequences and because the sponsors
believe it is advantageous to AEI Fund 26 to be able to change the
entity that provides our services without resorting to the mechanisms
in our operating agreement necessary to replace a managing member.

     AEI Fund Management has a staff of 34 professional and support
people engaged in real estate syndication, management, acquisition
and disposition transactions. It provides management services to
eleven publicly syndicated and four privately placed real estate
programs that are affiliated with our managers and described in more
detail under "Prior Performance" and in Exhibit B. Although our
managers believe they have adequate staff, directly or through
affiliated entities, to discharge their responsibilities to AEI Fund
26, they are not required by our operating agreement to devote any
minimum amount of time to providing services to AEI Fund 26.

     The following chart illustrates the relationship between AEI
Fund 26, our managers and affiliated entities that will provide
services to AEI Fund 26:




     [CHART:    Chart depicting organization of the Company
     and relationship with Managing and Special Members]



(1) 97% of cash flow from rents and other operating income, 99% of
    proceeds from sale of properties until investors receive their
    investment plus a 6.5% annual return, 90% of sale proceeds after that
    return.

(2) 3% of cash flow from rents and other operating income, 1% of
    sales proceeds until investors receive investment plus a 6.5% return,
    10% of sales proceeds after that return.

(3) The managers will make only a nominal capital contribution of
    $1,000.

(4) Reimbursement at cost, including allocated overhead, for services
    provided.


                       6

COMPENSATION TO THE MANAGERS

     Our managers and their affiliates, including the dealer
manager-AEI Securities-will receive compensation from AEI Fund 26
through their equity interests in distributions, through commissions
and fees received in organizing AEI Fund 26 and offering and selling
units, and through various reimbursements. This compensation
includes:

     Commissions and a nonaccountable expense allowance to AEI
     Securities of 10.0% of offering proceeds, most of which will be
     reallowed to broker-dealers that sell the units;

     An organization fee of 1.5% of offering proceeds (but only to
     the extent total organization and offering expenses do not exceed 15%
     of offering proceeds);

     A three percent interest in all of our operating cash flow,
     including our rental income;

     A one percent interest in all proceeds from sale of properties
     until our investors have received return of their investment, plus a
     6.5% return on that investment, and then 10% of any proceeds in
     excess of that amount;

     Subject to limitations, reimbursement for organization and
     offering costs and most forms of operating cost.


     The reimbursements to our managers will be at their cost and
will consist of:

  1. The organization and offering of units in AEI Fund 26 (estimated
     at $75,000 at minimum subscription level), the majority of
     which will be paid to third parties.

  2. The acquisition of properties (estimated at $25,500 at the
     minimum subscription level).

  3. The administration of Fund 26, including management, leasing, re-
     leasing and sale of properties (estimated at $50,000 for first
     12 months at the minimum subscription level).

     There are limits to the amount we pay our managers for these
reimbursements. In general, we reimburse our managers only for their
"cost," which includes the fully-loaded cost of employees and their
overhead, but in no event are these reimbursements for more than what
an unaffiliated third party would charge.  In addition, the amounts
we pay as front-end fees, including the commissions and
nonaccountable expense allowance, the organization fee, the
organization and offering expense reimbursements, and any acquisition
expenses, and the amounts that we reimburse our managers and their
affiliates for overhead and for their control persons, cannot exceed
the following:


     20% of subscription capital raised, plus

     10% of cash flow from operations less the interest in cash flow
     we pay our managers, plus

     1% of rental income, plus 3% of rental income for the first five
     years of each lease, plus

     3% of the sales price of properties if the managers provide
     sales services.

CONFLICTS OF INTEREST

     Because of the affiliation between our managers, AEI Securities,
AEI Fund Management and the various public and private programs that
these persons and entities have formed and managed, our managers will
operate under a number of conflicts of interest arising out of:

     the allocation of their work time between AEI Fund 26 and other
     programs;

     the absence of arms length negotiation of joint venture
     arrangements;

     the potential competition with affiliated programs for
     properties to be purchased;

     the common ownership of AEI Fund 26 and AEI Securities and the
     absence of an independent "due diligence" investigation by our dealer
     manager; and

     the reimbursement payments our managers receive, regardless of
     our profitability.


                       7


                            RISK FACTORS

GENERAL RISKS

YOU  WILL BE RELYING UPON THE MANAGERS TO SELECT PROPERTIES AND MIGHT
NOT LIKE THE PROPERTIES THEY SELECT.

     We had not selected any properties when this prospectus was
printed. It is not likely that you will be able to evaluate
properties before they are purchased. Although we will supplement
this prospectus when we believe that a property will be acquired, you
must rely upon the ability of our managers to choose properties. We
cannot assure you that the properties our managers select will
perform as favorable investments.

YOU  WILL NOT HAVE A RIGHT TO A RETURN OF YOUR INVESTMENT IF  YOU  DO
NOT LIKE THE PROPERTIES PURCHASED.

     You will not have a right to withdraw from Fund 26 or to receive
a return of your investment if you do not like the properties our
managers purchase. We will have a limited unit repurchase program,
but that program will not necessarily return your entire investment.

YOU WILL HAVE LITTLE CONTROL OVER OPERATIONS.

     You will have limited voting rights and will have no control
over our management and must rely almost exclusively on our managers.
Our managers have complete authority to make decisions regarding our
day-to-day operations and the acquisition of our properties, and
there are no limitations that you may enforce regarding the types of
commercial, net leased properties that may be acquired. The managers
may take actions with which you disagree. You will not have any right
to object to most management decisions unless the managers breach
their duties. You will be able to remove the managers only by
majority vote of investors or in other limited instances. Our
investors will not be able to amend our operating agreement in ways
that adversely affect our managers without their consent.

THERE  WILL  NOT  BE  A  MARKET FOR YOUR  UNITS  AND  THERE  WILL  BE
RESTRICTIONS PLACED ON THEIR TRANSFER.

     We are required to place significant restrictions on the
transfer of units to avoid being taxed as a corporation. That means
that you will be required to receive approval from the managers
before reselling or transferring your units. The managers are
required to refuse a transfer when it would adversely affect our tax
status. We will also require, as a condition to the transfer of any
units, that you be fully apprised by any purchaser of the apparent
value of your units, including the most recent redemption price. We
will require you to confirm your understanding of this value to us in
writing. We will provide this information to you if the purchaser
does not. Our operating agreement provides that, if you agree to sell
or transfer your units before this information is provided to you,
the managers may conclude that the transfer agreement is void. Our
operating agreement also provides that you must notify us when you
agree to sell your units and that AEI Fund 26 will have a right to
purchase your units at the same price by notifying you within 15 days
of receipt of your notice. Because of these requirements, there will
not be a public market for your units, you may not be able to sell
them at the time you desire, and any sale may be at a substantial
discount.

ALTHOUGH  WE  WILL  MAINTAIN A REPURCHASE  PROGRAM,  OUR  ABILITY  TO
REPURCHASE  UNITS WILL BE LIMITED BY TAX LAW AND BY OUR  CASH  NEEDS,
AND   WILL  BE  SUBJECT  TO  OUR  MANAGERS'  DETERMINATION  THAT  THE
REPURCHASE WILL NOT IMPAIR OUR OPERATING CASH.

     Although we will maintain a unit repurchase plan starting 36
months after the date of this prospectus, the amount of repurchases
we may make is limited by tax law, by the provisions of our operating
agreement and by our operating cash needs as assessed by our
managers. Our operating agreement limits aggregate repurchases in any
year to two percent of the units that are outstanding at the
beginning of the year. Our manager will also be able to exercise its
discretion to make no purchases if it believes that doing so would
impair our operating capital. Further, even if repurchases are made,
they will be at a discount from asset value and asset value will be
determined by our managers. Therefore, we cannot assure you that our
repurchase program will provide you with an opportunity to sell your
units, or that if it does, you will obtain full value for the units.

                       8


YOU  WILL NOT HAVE A RIGHT TO A RETURN OF YOUR CAPITAL PRIOR  TO  THE
TERMINATION OF THE PROGRAM.

     Although we intend to dissolve earlier, we are not required to
dissolve until 2055 unless you and a majority of the other investors
vote to have us dissolve earlier. You will not have a right to redeem
your units until we are dissolved. Although we will have a unit
repurchase program, that program is limited, provides for discounts
that may not provide you with full value for your investment, may be
periodically suspended at the discretion of our managers, and is not
available if there is not adequate capital to pay for repurchases.

THE  RATE OF DISTRIBUTIONS WE MAKE WILL VARY AND WILL DEPEND UPON THE
TIMING OF OUR PROPERTY PURCHASES AND SALES.

     Although we intend to make distributions to investors quarterly,
the amount we distribute will depend upon the amount of cash flow
from operations we generate and whether we have distributable
proceeds from properties we have sold. We cannot assure you that we
will always have adequate cash flow from either source to cover
expenses and also be in a position to make distributions. In the
early years of our operations, it is less likely that we will have
proceeds from sale of our properties and our distributions will be
primarily from rents and interest earned on temporary investment of
offering proceeds. We will also not receive rental income until after
we have purchased properties. Therefore, a larger portion of our cash
flow during the early years will be from interest income. Because we
expect the rate of interest we earn will be less than the rental
rates we receive, distributions per unit in the early years of
operations will likely be lower than in later years.

WE  MAY  NOT  BE ABLE TO DIVERSIFY OUR INVESTMENTS AND  THE  LACK  OF
DIVERSIFICATION COULD INCREASE THE RISK THAT WE WILL  NOT  ACCOMPLISH
ALL OF OUR INVESTMENT OBJECTIVES.

     If we raise only $1,500,000, we may purchase only one property
and the proportion of our capital spent on organizational and
offering costs will be higher. While we intend to diversify our
investments, we are under no obligation to do so and may invest in a
single property. If we have only one property, or a limited number of
properties, our operations will be subject to the increased risks of
factors affecting those properties.

PENNSYLVANIA INVESTORS: Because the minimum is less than $5,000,000,
you are cautioned to carefully evaluate our ability to accomplish our
objectives and to ask about the current amount of subscriptions
before you invest.

WE  MAY  BE  FORCED TO DISSOLVE IF BOTH MANAGERS CEASE  TO  EXIST  OR
WITHDRAW.

     If both our managers cease to exist, are removed, withdraw, or
are declared bankrupt, AEI Fund 26 may be required to dissolve early.
If we are forced to dissolve early, we might be required to sell our
properties at disadvantageous prices. We will not carry insurance on
the life of Robert Johnson, the special managing member and president
of our manager.

WE ARE CURRENTLY DEPENDENT UPON THE KEY PERSONNEL OF OUR MANAGERS AND
THE LOSS OF THEIR SERVICES, AND PARTICULARLY THE SERVICES OF ROBERT
P. JOHNSON AND PATRICK W. KEENE COULD HAVE A DETRIMENTAL AFFECT UPON
AEI FUND 26.

     Our success depends to a significant extent upon the continued
service of the officers of our managers and their affiliates. The
departure of those officers, particularly of Robert P. Johnson, our
special managing member and the CEO and President of our managing
member, or Patrick W. Keene, the Chief Financial Officer of our
Managing Member, could materially adversely affect our operations. We
do not maintain, and our managers do not maintain for our benefit,
employment agreements with, or key man insurance on, Mr. Johnson or
Mr. Keene.

WE ARE REQUIRED TO INDEMNIFY OUR MANAGERS FOR THEIR GOOD FAITH
ACTIONS AND THE INDEMNIFICATION OBLIGATION MAY CAUSE ANY LIABILITY
THEY INCUR TO BE PAID BY AEI FUND 26.

     Under our operating agreement our managers are not liable to us
for any act or omission that they take in good faith and that they
believe is in the best interest of AEI Fund 26, except for acts of

                       9

negligence or misconduct. Under certain circumstances our managers
will be entitled to indemnification from us for losses they incur in
defending actions arising out of their position as our managers.

REAL ESTATE INVESTMENT RISKS

WE MIGHT NOT BE SUCCESSFUL IN ACHIEVING OUR INVESTMENT OBJECTIVES IF
THERE ARE SIGNIFICANT CHANGES IN THE ECONOMIC AND REGULATORY
ENVIRONMENT AFFECTING REAL ESTATE.

     Our investments in commercial properties will be subject to
risks related to national economic conditions, changes in the
investment climate for real estate, changes in local real estate
market conditions, changes in interest rates, changes in real estate
tax rates, governmental rules and fiscal policies, and other factors
beyond the control of our managers. Changes in these economic and
regulatory factors could cause the value of the properties we hold to
decline, cause some of our tenants to default on their lease
obligations, reduce any tax benefits we provide to our investors, or
otherwise render unattractive some of the ways we do business.

WE FACE COMPETITION FOR THE PURCHASE AND FINANCING OF PROPERTIES FROM
ENTITIES WITH SUBSTANTIALLY MORE CAPITAL AT THEIR DISPOSAL, SUCH AS
REAL ESTATE INVESTMENT TRUSTS AND TRADITIONAL FINANCING SOURCES, THAT
MAY CAUSE US TO HAVE DIFFICULTY FINDING PROPERTIES THAT GENERATE
FAVORABLE RETURNS.

     The rental rates that we are able to receive on the properties
we purchase depend substantially upon the presence of competition
from other property purchasers and, to a certain extent, upon the
availability of mortgage financing at similar rates that would allow
a tenant to own its property. The availability of these alternative
purchasers or sources of financing at lower rates has periodically
caused competition for affiliated programs for attractive properties
and caused reduction in market rental rates, both of which may
adversely affect the performance of a real estate program.

IF WE HAVE DIFFICULTY FINDING ATTRACTIVE PROPERTIES, AND WE ARE
DELAYED IN INVESTING THE PROCEEDS FROM THIS OFFERING, IT IS LIKELY
THAT THE RETURNS TO OUR INVESTORS WILL BE REDUCED.

     The amount of proceeds from this offering that we invest at
money market rates will produce less income than proceeds invested in
properties. Accordingly, the overall return to AEI Fund 26 may be
reduced to the extent we are delayed in investing those proceeds in
properties.

     If a tenant defaults on its lease we cannot assure you that we
will be able to find a new tenant for the vacant property who will
pay the same rental rate or that we will be able to sell the property
without incurring a loss. If a tenant files for bankruptcy we might
not be able to quickly recover the property from the bankruptcy
trustee. Because we probably could not obtain a new tenant while a
property is held by a trustee, the property might not generate rent
that covers our expenses associated with the property during this
period.

SOME PROPERTIES MAY BE SUITABLE FOR ONLY ONE USE AND MAY BE COSTLY TO
REFURBISH IF A LEASE IS TERMINATED.

     Most of the properties we buy will be designed for a particular
tenant. If we own a property when the lease terminates and the tenant
does not renew its occupancy under the lease, or if the tenant
defaults on its lease, the property might not be marketable without
substantial capital improvements. Improvements could require the use
of cash that would otherwise be distributed to you as an investor.
Attempting to sell the property without improvements would also
likely result in a lower sales price.

WE COULD LOSE MONEY IF CONSTRUCTION OF IMPROVEMENTS ON A PROPERTY WE
OWN IS NOT COMPLETED AND A TENANT DEFAULTS ON IT REPURCHASE
OBLIGATION.

     We may purchase land prior to completion of improvements or pay
for improvements made by tenants as they are completed to assist in
financing the construction of improvements on a property. Although
the tenant will be responsible for the construction in these
arrangements, and to repurchase the property if construction is not
completed, this type of development can present risks because cost
overruns, non-performing contractors, changes in construction codes
and changes in cost can occur during construction that can cause
default on the construction contract. If construction is not
completed and the tenant defaults in the contractual repurchase


                       10

obligation we create when construction is commenced, we might not be
able to resell the property at a price equal to our purchase price.
We may also need to pay more for its completion to enhance its
potential sale or rental.

WE CAN REINVEST PROCEEDS FROM SALES OF PROPERTIES IN REPLACEMENT
PROPERTIES WITHOUT YOUR APPROVAL.

     We may, from time to time, sell properties and reinvest the
proceeds in replacement net leased properties rather than
distributing all of the proceeds to you. You will not have the right
to receive all the cash we receive when we sell properties and must
rely upon the ability of our managers to find replacement properties
in which to reinvest the proceeds. We intend, however, to distribute
to investors any net cash gain representing the difference between
the sale price and the purchase price of properties. If we provide
financing to purchasers, upon the final sale of all our properties,
our liquidation and the distribution of cash to you could be delayed
until the financing is fully collected.

THE INSURANCE WE PURCHASE FOR OUR PROPERTIES MIGHT NOT BE ADEQUATE TO
COVER LOSSES WE INCUR.

     Although our managers will attempt to arrange for comprehensive
insurance coverage on our properties, some catastrophic losses may be
either uninsurable or not economically insurable. If a disaster
occurs, we could suffer a complete loss of capital invested in, and
any profits expected from, the affected properties. If uninsured
damages to a property occur and we do not have adequate cash to fund
repairs, we would likely be forced to sell the property at a loss or
to borrow capital to fund the repairs and would mortgage the property
to secure the borrowing.

CONFLICT OF INTEREST RISKS

     We will not have any employees and will be dependent upon AEI
Fund Management for most of the services required for our operations.
Robert P. Johnson, our special managing member, is also the
President, CEO, and a director of our managing member, AEI Fund
Management and AEI Securities. Further, Mr. Johnson is the sole
shareholder of AEI Fund Management, and the majority shareholder of
AEI Capital Corporation, which is the sole shareholder of AEI Fund
Management XXI and AEI Securities. Our investors will not have any
interest in any of these entities and will not be in a position to
control their activities. The interlocking interests of our managers
and affiliated entities create a number of conflicts of interest that
are described in this prospectus under the caption "Conflicts of
Interest," including the following.

OUR MANAGERS AND THE SERVICE ENTITIES WITH WHICH THEY CONTRACT WILL
PROVIDE SIMILAR SERVICES TO A NUMBER OF AFFILIATED PROGRAMS THAT MAY
IMPAIR THEIR ABILITY TO PROVIDE SERVICES TO US.

     AEI Fund Management provides services to eleven similar publicly
syndicated and four privately syndicated affiliated programs, many of
which have been operating for a number of years. These other programs
also acquire, operate and dispose of commercial properties. The time
devoted by our managers and AEI Fund Management on the activities of
these other entities may conflict with the time required to operate
AEI Fund 26. Our operating agreement does not require our managers to
devote a minimum amount of time to providing services to AEI Fund 26.

WE MAY BE IN COMPETITION WITH OTHER AFFILIATED REAL ESTATE PROGRAMS
FOR THE PURCHASE OR SALE OF PROPERTIES.

     AEI Fund 26 may have cash available for investment in properties
at the same time as another affiliated program. Most of these
affiliated programs have investment objectives that are similar or
identical to the objectives of AEI Fund 26. Because our managers and
affiliates will make property purchase decisions for multiple
programs, there may be conflicts of interest as to which program
should acquire a property. Although the managers have a fiduciary
duty to act in the best interest of AEI Fund 26, they have a similar
obligation with respect to the affiliated programs. Therefore, we
cannot assure you that AEI Fund 26 will always be in the position of
purchasing the most favorable properties that are made available to
our managers.

                       11

IF WE PURCHASE PROPERTIES JOINTLY WITH ANOTHER AFFILIATED PROGRAM,
CONFLICTS MAY ARISE IN DECISIONS REGARDING THE OPERATION OR SALE OF
THE PROPERTY.

     If we purchase a property jointly with another affiliated
program, it is likely that all of the decisions relating to the
property will affect both programs. Nevertheless, some operating
decisions, such as the term of leases affecting the property or the
timing of the sale of a property, may affect one program differently
than another. Our managers will be subject to conflicts of interest
in making these decisions.

OUR MANAGERS AND THEIR AFFILIATES MAY PURCHASE UNITS FROM US OR FROM
OTHER INVESTORS AND THEIR PURCHASES MAY BE AT PRICES THAT ARE LESS
THAN THE ASSET VALUE ATTRIBUTABLE TO THE UNITS.

     There are no restrictions, other than tax restrictions, on the
ability of our managers or their affiliates to purchase units.
Although there will be no trading market for the units, the managers
may be in a position to purchase units from other investors at prices
that are below the prices we are selling them in this offering and
below our asset value per unit.

AEI SECURITIES, THE DEALER MANAGER THAT WILL COORDINATE THE SALE OF
THE UNITS AND PERFORM THE DEALER MANAGER'S "DUE DILIGENCE"
INVESTIGATION, IS AN AFFILIATE OF OUR MANAGERS.

     The dealer manager of an offering of securities such as our
units is obligated to perform a "due diligence" investigation to
confirm the accuracy of the statements made in offering documents. In
the case of AEI Fund 26, the dealer manager is an affiliated entity.

WE WILL MAKE PAYMENTS TO OUR MANAGERS FOR THEIR SERVICES WHETHER OR
NOT WE ARE PROFITABLE.

     The operating agreement that governs our operations requires us
to make payments to our managers for the services they provide
whether or not we are profitable. Although the managers are required
to act in a manner that is in our best interests, these payments may
create conflicts in how the managers deal with us.

WE ARE NOT PROVIDING YOU WITH SEPARATE LEGAL OR ACCOUNTING
REPRESENTATION.

     AEI Fund 26, our investors and our managers are not represented
by separate counsel. Although our counsel has given the tax opinion
referenced in the "Federal Income Tax Considerations" section of this
prospectus, and an opinion that there is legal authority to issue the
units, our counsel and accountants have not been retained, and will
not be available, to provide other legal counsel or tax advice to
individual investors.

FEDERAL INCOME TAX RISKS

THE TIMING OF TAX DEDUCTIONS COULD BE CHALLENGED BASED UPON THE
ALLOCATION OF "BASIS" AMONG PROPERTIES, AND INVESTORS COULD BE
SUBJECTED TO INCREASED TAX.

     The allocations by our managers of the purchase price of
properties among buildings, personal property, and the underlying
land will affect the amount of deductions we may take because some of
these items are depreciable and some are not. These allocations
cannot be made until we purchase the properties. We will not seek an
opinion of counsel on whether the allocation of purchase price, the
rate of depreciation or the timing of deductions is proper. If the
Internal Revenue Service successfully challenged these allocations,
investors could lose a portion of the deductions and be subject to
increased taxable income in the early years of operations.

THE RESALE OF PROPERTIES COULD CAUSE GAINS TO BE TAXED AS ORDINARY
INCOME.

     If we were characterized as a dealer in real estate when
properties are sold, gain or loss on sales would be considered
ordinary income or loss. Whether we will be characterized as a dealer
in real estate is dependent upon future events and the timing of
property purchases and sales. We will not seek an opinion of counsel
on this issue. Because ordinary income is, in most cases involving
individual taxpayers, taxed at higher rates than capital gain, if we
were characterized as a dealer there could be an increase in the
taxes you will be required to pay on our income, if any, that is
allocated to you.

                       12

THE INTERNAL REVENUE SERVICE COULD CHARACTERIZE CERTAIN SALE-
LEASEBACK TRANSACTIONS INTO WHICH WE MAY ENTER AS FINANCING
TRANSACTIONS AND NOT AS TRUE LEASES.

     If the IRS were to characterize a sale-leaseback transaction as
a financing, investors could be deprived of deductions for
depreciation and cost recovery, and income derived from that
transaction would not be passive activity income that could
potentially be offset by passive activity losses that we generate or
that result from your investments in other passive activities.

INCORRECT ALLOCATION OF EXPENSES AMONG START-UP, ORGANIZATION AND
SYNDICATION COSTS COULD CAUSE MORE TAXABLE INCOME.

     Our managers will allocate expenses during our early stages of
operation to start-up, organization, syndication and acquisition
expenses for purposes of the deduction or capitalization of such
expenses. These allocations cannot be made until the expenses are
incurred. We will not seek an opinion of counsel regarding the
propriety of the allocations. If the Internal Revenue Service
determines that the allocations were improper, we could lose some
deductions and our investors would recognize more income during the
early stages of the operation of properties.


                           CAPITALIZATION

     The following table sets forth our historical capitalization as
of April 30, 2005 and our pro forma capitalization as of that date as
adjusted to give effect to the sale of the minimum of 150,000 units
and the sale of the maximum of 10,000,000 units:
                                               Pro Forma     Pro Forma
                                             After Sale of  After Sale of
           Title of Class        Historical  150,000 Units  10,000,000 Units

           Managers' capital     $  1,000    $     1,000    $       1,000
           Investors' capital           -      1,500,000      100,000,000
           Less offering expenses       -       (225,000)     (12,800,000)
                                  --------    -----------    -------------
           Total capital         $  1,000    $ 1,276,000    $  87,201,000
                                  ========    ===========    =============


                      ESTIMATED USE OF PROCEEDS

     We expect to have approximately $1,275,000 available for
investment in properties and reserves if $1,500,000 is raised and
$87,200,000 if $100,000,000 is raised. The following table shows how
we expect to use these proceeds. Several of the items listed below
cannot be precisely calculated and could vary materially from the
amounts shown. These items include "other offering expenses," which
consist of expenses incurred by our managers and the dealer manager
in preparing offering documents and coordinating the sale of the
units, and acquisition expenses, which consist primarily of payments
to third parties for professional work and reimbursements to our
managers for their costs of investigating and completing purchases.

                                      Minimum                Maximum
                                  (150,000 Units)       (10,000,000 Units)
                                Dollars     Percent      Dollars    Percent
 Gross offering proceeds     $ 1,500,000    100.00%  $ 100,000,000   100.00%
 Less offering expenses:
   Selling commissions,
   nonaccountable expense
   allowance and due diligence
   expenses                     (157,500)    10.50%    (10,100,000)   10.10%
   Other Offering expenses       (67,500)     4.50%     (2,700,000)    2.70%
                              ------------  --------  -------------  --------
 Amount available for investment
   (net proceeds)              1,275,000     85.00%     87,200,000    87.20%
                              ------------  --------  -------------  --------
 Acquisition expenses            (25,500)     1.70%     (1,550,000)    1.55%
 Working capital reserve          (7,500)      .50%       (500,000)     .50%
                              ------------  --------  -------------  --------
 Amount available for purchase
   of properties             $ 1,242,000     82.80%     85,150,000    85.15%
                              ============  ========  =============  ========


                       13

     Other offering expenses shown in the table above include
federal and state registration fees, accountant's fees and fees of
counsel, printing costs, and personnel costs of the managing member
for coordinating the admission of members, the processing of
subscriptions, and other investor relations matters. Other offering
costs also includes, to the extent that total other offering costs
is less than 5% of offering proceeds, an organizational fee to the
managing member equal to 1.5% of offering proceeds.

     The amount available for investment in properties will not, in
any event, be less than 80% of gross offering proceeds. We will hold
the proceeds of the offering in trust for the benefit of the
purchasers of units and use them only for the purposes set forth
above.

     We will continue to offer and sell units for twelve months after
the date of this prospectus. At the election of our managers, we may
offer units during a second twelve months. We will not commit to
invest more money in properties than we raise through the sale of
units. Accordingly, our managers believe that we will have adequate
capital to fund our operation for the first 24 months of operation.

                 INVESTMENT OBJECTIVES AND POLICIES

PRINCIPAL INVESTMENT OBJECTIVES

     AEI Fund 26 will acquire only commercial net leased properties.
It is our intent that all of the properties will be leased to single-
tenants under a "net" lease that requires the tenant to pay the
operating expenses of the property, such as taxes, maintenance and
insurance. Some of our leases, particularly those for properties used
in the sale of retail goods or services, will require that, as the
landlord, we will bear the costs of maintaining the structural
integrity of the building, including roof and foundation. We will
investigate the acquisition of properties located throughout the
United States, including the states in which prior affiliated
programs have purchased properties as described under the caption
"Prior Performance." We may sell properties from time to time and
purchase replacement properties when our managers believe market
conditions are favorable and when our managers believe that we can
profit from this type of sale and reinvestment. We may commit to
purchase properties at either agreed prices or subject to pricing
formulas. Most sale leaseback transactions are negotiated at rental
rates that reflect current real estate financing conditions.

ACQUISITION OF PROPERTIES

     We will not purchase or lease any property from, nor sell or
lease any property to, our managers or their affiliates. We may,
however, purchase property that our managers or their affiliates
purchased in their own name to help us acquire the property. If we
do, we will purchase the property from our managers or their
affiliate at a price no greater than the price they paid, plus
acquisition and holding expenses. Although we do not intend to
acquire any unimproved or undeveloped properties, or to participate
in the speculative development of any properties, we may acquire raw
land prior to the building of improvements and may advance funds or
make loans in connection with the construction of properties that we
intend to acquire.

     We will obtain an independent appraisal of the fair market value
of each property we acquire. Nevertheless, our managers will rely
upon their own analysis, and not upon the appraisals, in determining
whether to acquire a particular property. Copies of appraisals will
be retained at our offices for at least five years and will be
available for inspection and duplication by any investor. Prior to
the acquisition of a property, we will be provided with evidence
satisfactory to our managers that we will acquire marketable title to
the property, subject only to liens and encumbrances such as liens
for tax assessments, utility easements, and other encumbrances
typical in commercial transactions. Such evidence may include a
policy of title insurance, an opinion of counsel or such other
evidence as is customary in the locality in which the property is
situated.
                       14


     In certain instances, we may acquire land on which a tenant
wishes to construct a net leased commercial property prior to
completion of the improvements and lease the property to the tenant.
We may also pay for improvements as they are being completed by a
construction company hired by the tenant.  These construction
contracts normally include a provision allowing us to sell the entire
property to the tenant if construction is not completed in a timely
fashion.  We will not acquire raw land unless there are plans that
provide for construction of improvements within one year of
acquisition, and will not pay our managers or their affiliates any
development or construction fees for the acquisition activities
described above.

TEMPORARILY INVESTED FUNDS

     After release from escrow, and before investment in properties,
we will invest all of our funds in short-term government securities
or in deposits with a financial institution and will earn interest at
short-term deposit rates. Although we may retain some funds to pay
operating expenses and working capital reserves, we will distribute
to the investors as a return of capital any of the net proceeds of
this offering that have not been invested or committed for investment
in real property within 24 months after the date of this prospectus
or twelve months after termination of the offering of units. These
distributions will be without interest but will include a
proportionate amount of any commissions or other organization and
offering expenses originally deducted. All funds will be available
for our general use during this period and may be expended in
operating any properties that have been acquired.

     For purposes of the foregoing, we will consider capital as being
committed to properties and not returnable to the investors if
written contractual agreements have been signed prior to the period
described above, regardless of whether the property is ultimately
purchased. To the extent that funds have been reserved to make
contingent payments in connection with a property under a written
contractual agreement, or because our managers determine that
additional reserves are necessary in connection with a property,
regardless of whether such payment is ultimately made, funds will not
be returned to investors.

SALE OF PROPERTIES

     At the discretion of our managers, we will either distribute all
or a portion of the net proceeds from sale of properties to investors
or reinvest net proceeds in properties that meet our acquisition
criteria. We will not reinvest net proceeds from the sale of a
property unless enough cash is distributed to investors to allow them
to pay their income taxes resulting from the sale, assuming they are
taxed at a rate of seven percent above the individual capital gains
rate.

     Rather than selling our entire interest in a property, we may
sell co-tenancy or other fractional interests. Our managers believe
that sales of smaller interests to property buyers seeking to
complete like-kind "exchanges" under Section 1031 of the Internal
Revenue Code can result in greater profits as compared to listing and
selling the property through a real estate broker. In those instances
in which we do not sell all of a property, we will retain, either
alone or with another program sponsored by affiliates of our
managers, the authority to manage the property.

     Although we intend to sell our properties for cash, purchase
money obligations secured by mortgages may be taken as partial
payment. The terms of payment may be affected by custom in the area
in which the property is located and by prevailing economic
conditions. To the extent we receive notes and property other than
cash, that portion of the proceeds will not be included in net
proceeds from sale until and to the extent the notes or other
property are actually collected, sold, refinanced or otherwise
liquidated. Therefore, the distribution to investors of the cash
proceeds of a sale may be delayed until the notes or other property
are collected at maturity, sold, refinanced or otherwise converted to
cash. We may receive payments in the year of sale in an amount less
than the full sales price, and subsequent payments may be spread over
several years. The entire balance of the principal may be a balloon
payment due at maturity. For federal income tax purposes, unless we
elect otherwise, we will report the gain on such sale proportionately
under the installment method of accounting as principal payments are
received.

                       15

BORROWING & LENDING POLICIES

     We will acquire all of our properties for cash: we will not use
any debt financing to acquire properties or refinance properties to
generate capital to acquire other properties. Our managers do not
expect that we will incur any indebtedness, although we may borrow to
finance the refurbishing of a property or for other operating cash
needs. The programs sponsored by affiliates of our managers have
rarely borrowed for such purposes and we therefore believe it is
unlikely that such borrowings will be incurred.

     We will not obtain permanent financing from the managers or
their affiliates. Recourse for any indebtedness will be limited to
the particular property to which the indebtedness relates. To the
extent recourse is limited to a particular property such indebtedness
would, under most circumstances, increase the investors' tax basis in
the units. We will not issue any senior securities and will not
invest in junior mortgages, junior deeds of trust or similar
obligations. To the extent that any financing is not fully
amortizing, and it exceeds 25% of the original cost of properties,
its maturity (its due date) will not be earlier than ten years after
the date of purchase of the underlying property or two years after
the anticipated holding period of the property (provided such holding
period is at least seven years).


     AEI Fund 26 will not underwrite securities of other issuers,
will not offer its securities in exchange for property and, except
with respect to the joint venture investments described below, will
not invest in the securities of other issuers for purposes of
acquiring control. We will not make any loans to our managers or
their affiliates.


JOINT VENTURE INVESTMENTS

     We may purchase property jointly with other programs sponsored
by our managers or their affiliates. We will make these joint
ventured investments only with a program that has investment
objectives and management compensation provisions substantially the
same as those of AEI Fund 26. Our ability to enter into a joint
venture may be important if we wish to acquire an interest in a
specific property but do not have sufficient funds (or, at the time
we enter into a commitment to acquire a specified property, cannot
determine whether we will have sufficient funds) to acquire the
entire property.

     In any joint venture with another fund sponsored by our managers
or their affiliates, the following conditions must be satisfied:

     the joint venture must have comparable investment objectives and
     the investment by each party to the joint venture must be on
     substantially the same terms and conditions;

     we will not pay more than once for the same services and will
     not act indirectly through any such joint venture if we would be
     prohibited from doing so directly;

     the compensation of the managers and such affiliates in the
     other fund must be substantially the same as their compensation in
     AEI Fund 26; and

     we must have a right of first refusal to purchase the other
     party's interest if the other party to the joint venture wishes to
     sell a property.

     There is a potential risk of impasse on joint venture decisions
and a risk that, even though we will have the right of first refusal
to purchase the other party's interest in the joint venture, AEI Fund
26 may not have the resources to exercise such right.

DISTRIBUTIONS

     We intend to make distributions to investors on a quarterly
basis commencing with the first calendar quarterly period after
proceeds are released from escrow. The distribution rate will vary
based upon the availability of the cash flow from operations or
proceeds of a sale, if any. During the early years of our operations,
cash flow will be derived from both the interest we earn on offering

                       16

proceeds and, as the proceeds are invested in properties, the rent
from those properties. Because we expect that the interest rate we
earn will be less than the rental rate, and because we do not intend
to use offering proceeds, or to incur indebtedness, to pay
distributions, we expect that distributions per unit will be lower
during the early years of operations.

     We will not use net cash flow from operations to acquire
properties, although we may hold cash flow as reserves and may use
cash flow to repurchase units. We will distribute quarterly
substantially all of the cash flow we receive from operations that is
not needed for our operations or to fund reserves. To the extent
rental cash flow is interrupted by a tenant default or other factors,
or property management costs increase, distributions to investors may
fluctuate. We also intend to distribute, at the time we sell
properties, any net cash gain representing the difference between the
sale price and the purchase price of properties.

     Distributions to investors who elect to participate in a
distribution reinvestment plan will be applied to the purchase of
additional units. You should read the section of this prospectus
entitled "Cash Distributions and Tax Allocations" for a more detailed
description of how our cash is allocated between the interest of our
managers and the interests of our investors.


RESERVES FOR OPERATING EXPENSES

     Our managers expect that about 1/2% of the offering proceeds will
initially be reserved to meet operating costs and expenses. To the
extent that these reserves and any income are insufficient to defray
our costs and other obligations, it may be necessary to sell
properties, possibly on unfavorable terms. We may increase reserves
to meet anticipated costs and expenses or other economic
contingencies during the holding period of a property. Any excess
reserves may be distributed to investors if our managers determine
that such reserves are not necessary for operations.


MANAGEMENT OF PROPERTIES

     Our managers or their affiliates will manage each property and
enforce the lease obligations of the tenants. The managers will:

     negotiate disputes with tenants;

     manage the re-letting and remodeling of properties;

     receive and deposit monthly lease payments;

     periodically verify payment of real estate taxes and insurance
     coverage; and

     periodically inspect properties and tenant sales records, where
     applicable.

     Because our properties will be net leased, the tenants will be
responsible for payment of the day-to-day on-site management, taxes,
insurance and maintenance expenses of our properties.

CHANGES IN INVESTMENT OBJECTIVES AND POLICIES

     We will not make any material changes in the investment
objectives and policies described above without first obtaining the
written consent or approval of investors owning in the aggregate more
than 50% of outstanding units, excluding units held by the managers
and their affiliates.

                       17

                           THE PROPERTIES

     We had not acquired any properties when this prospectus was
printed. Our managers are continually evaluating properties for
acquisition and engaging in negotiations with sellers, tenants and
developers regarding the potential purchase of properties. Our
managers intend to diversify the type and location of properties we
acquire consistent with the amount of proceeds available from this
offering,. We have not placed any limitations upon the amount or
percentage of assets that may be invested in any one property.
Although we intend to purchase two or more properties with the net
proceeds of this offering, we may purchase only a single property if,
in our manager's judgment, that would be in the best interest of AEI
Fund 26.

     Our leases will provide that risks such as fitness for use or
purpose, design or condition, quality of material or workmanship,
latent or patent defects, compliance with specifications, location,
use, condition, quality, description or durability will be borne by
the lessee. As is customary in commercial property transactions, most
of our leases will provide for early termination upon the occurrence
of events such as casualty loss or substantial condemnation. Some of
our leases, particularly those for properties used in the sale of
retail goods or services, will require that, as the landlord, we will
bear the costs of maintaining the structural integrity of the
building, including the roof and foundation.

ACQUISITION CANDIDATES

     Prior programs that were sponsored by our managers or their
affiliates have invested approximately 66% of their capital in food
service (restaurant) properties and 34% in retail types of
properties. Our managers believe that real estate used in the
restaurant and retail market segments is less susceptible to changes
in general economic conditions than other commercial real estate. We
therefore expect that AEI Fund 26 will purchase properties primarily
in these markets, although we may purchase free-standing net-leased
properties in other segments of the commercial real estate market.
Our managers will have authority to choose the properties we acquire
based on their judgment of the appropriate balance between the level
of income and gain a property is likely to generate and the level of
risk it represents.

                       18


THE RESTAURANT INDUSTRY

     As illustrated by the following graphs, Americans are spending
increasing amounts of their total food expenditures at restaurants.
The National Restaurant Association anticipates that in 2005
Americans will spend 47 cents, while in 1970 they spent less then 35
cents, of every food dollar in restaurants.



    [GRAPHS:  Three graphs that depict the increase in consusmer
    food dollars spent away from the home, chain restaurants'
    sales growth, and number of chain restaurant units]


     The sales at the top 100 national  restaurant chains, and the
total   restaurant outlets operated by these chains, have increased
consistent with this demographic trend. The chain restaurant industry
strives to provide convenient food service by opening new locations
that follow population expansion patterns. The third graph
illustrates how the top 100 restaurant chains increased their store
count during 2003 by 7,264 to a total of 182,203.

     We believe that these national chains generally provide
consistent food services that have brand recognition and stability
relative to individual restaurant outlets and small chains.
Accordingly, we intend to focus our acquisitions within the
restaurant industry on these larger chains, but also will evaluate
newer restaurant concepts as they become established if our managers
believe they have substantial potential and meet our acquisition
criteria.

     Prior programs sponsored by our managers or their affiliates
have acquired properties leased to brand-name national and regional
entities such as Applebee's, Champps, Arby's, TGI Friday's and Johnny
Carino's. The expansion of the restaurant industry, coupled with
demographic trends pointing to future growth, lead our managers to
believe that the restaurant segment of the real estate market will
continue to offer attractive investment opportunities for AEI Fund
26.

                       19

THE RETAIL INDUSTRY

        [GRAPHS:  Three graphs depicting spending in retail
        establishments, leasable retail area in U.S. shopping
        centers and number of U.S. shopping centers]


     Our managers believe that free-standing commercial properties
net leased to national retailers have many of the same
characteristics as brand name restaurant properties.  Like spending
in the food services industry, consumer retail spending continues to
grow and has encouraged growth in shopping centers, including stand-
alone retail centers, that follows demographic trends in population.
As illustrated by the graphs, the total leased space devoted to
retail shopping grew from almost 1.5 billion square feet in 1970 to
more than 5.8 billion square feet in 2003.  The last graph depicts
the growth in the number of shopping centers in the United States
from 1970 to 2003. The U.S. now has 400% more shopping centers than
it did just 35 years ago.

     Prior programs sponsored by our managers or their affiliates
have acquired free-standing commercial properties, many of them
located on out-parcels of shopping centers, leased to retail tenants
including: Best Buy electronic superstores, Jared's The Galleria of
Jewelry stores, Eckerd drug stores, CarMax  automotive superstores
and Tractor Supply Company retail farm stores.

ACQUISITION CRITERIA

     In determining whether a property may be a suitable acquisition,
our managers will consider the following factors, among others:

     the creditworthiness of the lessee and the lease guarantor, if
     any, and their ability to meet the lease obligations;

     the terms of the proposed lease and guaranty, if any, including
     any provisions relating to rent increases and the payment of
     operating expenses by the tenants;

     the location, condition, use and design of the property and its
     suitability for a long-term net lease;

     the demographics of the community in which a property is
     located;

     the prospects for long-term appreciation of the property; and

     the prospects for long-range liquidity of the investment.

     All property acquisition decisions made by our managers will
involve balancing these factors with the economic characteristics,
including rental return and purchase price of each property to
provide, in their judgment, the likelihood of a favorable return to
investors while minimizing risk of loss. In making these decisions,
our managers may give more weight to some of the forgoing factors
than others and the weight attributed to any one factor may not be
consistent among all properties acquired. Our success in achieving
our investment objectives will, to a substantial extent, be dependent
upon the considerable judgment exercised by our managers in making
these decisions.

                       20

PROPERTY UPDATES

     If there is a reasonable probability that a property will be
acquired during the offering period, we will supplement this
prospectus to disclose important information about such property.
Based upon the experience and acquisition methods of our managers,
this will normally occur when a legally binding purchase agreement is
signed for a property, but may occur sooner or later depending upon
the circumstances involved.

     Supplements to this prospectus will describe any property to be
acquired, the proposed terms of purchase, the financial results of
any prior operations of the property, if available, and other
information considered appropriate for an understanding of the
transaction. Upon termination of this offering, no further
supplements to this prospectus will be distributed, but we will
continue to provide investors with acquisition reports containing
substantially the same information regarding the properties acquired.
You should understand that you should not rely upon the initial
disclosure of a proposed acquisition as any assurance that we will
ultimately consummate the acquisition or that the information
provided concerning an acquisition will not change between the date
of this prospectus (or supplement) and the actual purchase date.


                              MANAGERS

FIDUCIARY RESPONSIBILITY

     Our managers are accountable to us as fiduciaries and must
exercise good faith in handling our affairs. Our managers have
fiduciary responsibility for the safekeeping and use of all our
capital and assets, whether or not in the managers' possession or
control. Our managers are prohibited from employing, or allowing any
other person or entity to employ, our capital or assets in any manner
except for the exclusive benefit of our investors.

     The managers will not be liable to us or our investors for acts
or omissions which may occur in the exercise of their judgment, as
long as their actions were made in the good faith belief that the
actions were in the interest of AEI Fund 26 and not the result of
negligence or misconduct. We will indemnify the managers for any
claim or liability arising out of their activities on behalf of AEI
Fund 26, unless the claim or liability was the result of negligence
or misconduct.

     In the opinion of the SEC and the securities administrators of
most states, indemnification for liabilities arising under securities
laws is against public policy and therefore unenforceable. If a claim
for indemnification for liabilities under securities laws is asserted
by our managers in connection with registration of the units, after
apprising such court of the position of the SEC and state securities
administrators, we will submit to a court of appropriate jurisdiction
the question of whether indemnification by us is against public
policy and will be governed by the final adjudication of such issue.

MANAGEMENT

     Our managers will have the sole and exclusive right, power and
responsibility to manage our business. Among other powers, and
subject to the restriction that financing not be obtained to acquire
properties, our managers will have authority to borrow funds to meet
our operating cash needs and to secure those borrowings with our
properties. Our managers will make all of the investment decisions,
including:

      decisions relating to the properties to be acquired;

      the method and timing of any refinancing of the properties;

      the selection of tenants;

      the terms of leases on the properties; and

      the method and timing of the sale of our interest in properties.

                       21

     Our managers will coordinate and manage all of our activities,
maintain our records and accounts, and arrange for the preparation
and filing of all our tax returns. Some of the administrative and
management functions to be performed by our managers may be delegated
to their affiliates, provided that any compensation paid to
affiliates of our managers is at cost. For these purposes, cost means
the actual expenses affiliates incur in providing services,
including:

     the salaries, fees and expenses paid to employees and
     consultants of our managers and their affiliates for work they
     perform on our behalf; and

     office rent, telephone, travel, employee benefit expenses and
     other expenses attributable to providing those services.

     Our managers allocate and charge us for a majority of these
expenses based upon the amount of time devoted by their employees to
our affairs as calculated in quarter-hour increments and recorded on
employee daily time records. They allocate some general expenses at
the end of each month based upon the number of our investors and our
capitalization relative to other programs that they manage.

BACKGROUND AND EXPERIENCE OF MANAGEMENT

AEI FUND MANAGEMENT XXI

     AEI Fund Management XXI, our manager, is a Minnesota corporation
formed in 1994 to serve as a general partner of AEI Income & Growth
Fund XXI Limited Partnership, an affiliated limited partnership with
investment objectives and structure similar to AEI Fund 26. In
addition to AEI Income & Growth Fund XXI Limited Partnership, our
manager serves as the general partner or managing member of AEI
Income & Growth Fund XXII Limited Partnership, AEI Income & Growth
Fund 23 LLC, AEI Income & Growth Fund 24 LLC, and AEI Income & Growth
Fund 25 LLC, publicly syndicated real estate programs with structures
and objectives similar to AEI Fund 26.

     The sole director of our manager is Robert P. Johnson, who also
serves as its President. Mr. Johnson is also the majority shareholder
of AEI Capital Corporation, the holding company for our manager. Each
of the officers of our manager also holds a position as an officer in
the corporations formed to serve as general partners of prior funds
sponsored by our managers and their affiliates. The officers and sole
director of our manager are as follows:

Name                Age                    Position
Robert P. Johnson   61    Sole Director, Chief Executive  Officer  and
                          President

Patrick W. Keene    46    Chief Financial Officer, Treasurer and Secretary


[PICTURE:  Robert P Johnson]

ROBERT P. JOHNSON, has been President, a director and the principal
stockholder of AEI Fund Management, a real estate management company
founded by him, since 1978. From 1970 to the present Mr. Johnson has
been employed exclusively in the investment industry, specializing in
real estate and other tax advantaged investments. In that capacity,
he has been involved in the development, analysis, marketing and
management of public and private investment programs investing in net
lease properties as well as public and private investment programs
investing in energy development.

     Since 1971, Mr. Johnson has also been the President, a director
and a registered principal of AEI Securities, which is registered
with the Securities and Exchange Commission as a securities broker-
dealer, is a member of the National Association of Securities
Dealers, Inc. and is a member of the Security Investors Protection
Corporation (SIPC). Mr. Johnson is currently a general partner or
principal of the general partner of each of the limited partnerships
and a managing member of each of the limited liability companies set
forth under "Prior Performance." He is the President, the sole
director, and majority stockholder of AEI Capital Corporation, which

                       22

serves as the holding company for AEI Securities, our manager, and
the general partner or managing member of affiliated public and
private real estate programs.

[PICTURE: Patrick W Keene]

PATRICK W. KEENE, a CPA (inactive), is Chief Financial Officer,
Secretary and Treasurer of AEI Fund Management. He has been employed
by AEI Fund Management since 1986 and is responsible for all
accounting functions, including coordination of reports to the SEC
and investors. Prior to joining AEI Fund Management, he was with KPMG
Peat Marwick Certified Public Accountants, first as an auditor and
later as a tax manager. He is an equity owner of AEI Capital
Corporation.



SECURITY OWNERSHIP OF MANAGERS

     Except for their interests as managing members of AEI Fund 26,
none of the managers, the affiliates of the managers, nor the
officers or directors of the managers, hold any units or other
interest in AEI Fund 26. Although it is not currently anticipated
that they will acquire units, the managers and their affiliates may
acquire units on the same terms as other investors. Units acquired by
the managers and their affiliates will not be considered in
determining whether the minimum number of units has been sold.

AEI FUND MANAGEMENT

     Most of our management services will be provided on behalf of
our manager by AEI Fund Management, a Minnesota corporation having
the same officers as our manager. AEI Fund Management is a program
management company that provides services to the real estate programs
that are described under the caption "Prior Performance" below.

     In addition to Mr. Johnson and Mr. Keene, AEI Fund Management
employs the following administrative management personnel:

[PICTURE: Richard J Vitale]

RICHARD J. VITALE, 38, a Chartered Financial Analyst, is Executive
Vice President of AEI Fund Management. He joined the company in 1992
and is responsible for general strategic corporate initiatives and
organization and management of the selling groups and corporate
market planning. He also serves as an assistant to the President.
Prior to joining the company, he was with Burlington Northern
Railroad in Ft. Worth, Texas, where he served as Corporate Treasury
Analyst. He is an equity owner of AEI Capital Corporation.

[PICTURE: Rona L Newtson]

RONA L. NEWTSON, 47, Senior Vice President of Operations of AEI Fund
Management is also a General Securities Principal and Chief
Compliance Officer of AEI Securities. She joined AEI Fund Management
in 1993 and is responsible for managing general operations and
securities compliance requirements of affiliate companies and
investment funds. Prior to joining the company, she was employed in a
similar capacity with Heartland Realty Investors, Inc. in
Minneapolis, Minnesota. She is an equity owner of AEI Capital
Corporation.

[PICTURE: George J Rerat]

GEORGE J. RERAT, 41, is the Vice President of Acquisitions of AEI
Fund Management. He joined the company in 2001 and is responsible for
developing and maintaining relationships with corporate sources of
sale leaseback financing opportunities and the negotiation of
acquisitions from those sources, as well as from commercial real
estate brokers and developers. He worked for a number of years in the
REIT industry prior to joining AEI.

                       23

[PICTURE: Michael B Daugherty]

MICHAEL B. DAUGHERTY, Esq., 47, is special real estate counsel to the
company and its affiliates. He has been representing the company
since 1987 and provides independent counsel to the acquisitions,
lease management, property disposition and 1031 exchange departments
in the evaluation, due diligence and contractual aspects of property
transactions.


     AEI Fund Management employs approximately 34 persons, four of
whom are engaged primarily in property acquisitions, two in property
management, four in property sales, seven in accounting and financial
reporting, ten in investor and dealer support services and seven in
general administrative services. Management services from AEI Fund
Management will be billed to us directly.

     The sponsors are using AEI Fund Management XXI as our managing
member, rather than AEI Fund Management, which provides most of our
services, because AEI Fund Management XXI is an S corporation that
produces more efficient tax consequences and because the sponsors
believe it is advantageous to AEI Fund 26 to be able to change the
entity that provides our services without resorting to the mechanisms
in our operating agreement necessary to replace a managing member.

     Our managing member may not withdraw from its position as a
manager without providing investors, as limited members, at least 90
days written notice and providing a substitute managing member who is
approved by vote of a majority of the units outstanding, excluding
units held by the managing member and affiliates. Our special
managing member may not withdraw during the first 24 months of our
operations. Our operating agreement provides that either manager may
be removed as a manager if a court determines that:

     the manager was grossly negligent in performing its obligations
     under our operating agreement;

     the manager committed fraud against our investors or AEI Fund
     26;

     the manager committed a felony in connection with management of
     AEI Fund 26;

     the manager was in material breach of its obligations under our
     operating agreement; or

     the manager is bankrupt.

     Our operating agreement also allows investors to remove and
replace either of our managers by vote of the holders of a majority
of the units, excluding units held by the manager.

                       24

                          PRIOR PERFORMANCE

     During the past 30 years, Mr. Johnson and affiliates have
syndicated 15 public and 15 private net lease property investment
programs in the United States.  Detailed information regarding many
of these programs is contained in the prior performance tables
attached as Exhibit B to this prospectus.

     Since 1984, Mr. Johnson and affiliates have formed and
syndicated 15 public real estate programs that have purchased, for
cash, single-tenant properties under long-term net leases. With the
exception of size and the ability to use mortgage indebtedness for
the acquisition of properties, all of these programs are similar to
AEI Fund 26. Mr. Johnson and affiliates have sponsored the following
public programs in which approximately 16,000 investors purchased
interests for a total investment of $262,961,267:

Fund Name                                      Month         Capital
                                              Offering       Raised
                                             Completed

AEI Income & Growth Fund 25 LLC            May 2005       $42,539,763

AEI Income & Growth Fund 24 LLC            May 2003       $24,831,283

AEI Income & Growth Fund 23 LLC            March 2001     $13,349,321

AEI Income & Growth Fund XXII              January 1999   $16,917,222
  Limited Partnership

AEI Income & Growth Fund XXI               January 1997   $24,000,000
  Limited Partnership

AEI Net Lease Income & Growth Fund XX      January 1995   $24,000,000
  Limited Partnership

AEI Net Lease Income & Growth Fund XIX     February 1993   $21,151,928
  Limited Partnership

AEI Real Estate Fund XVIII                 December 1990   $22,783,050
  Limited Partnership

AEI Real Estate Fund XVII                  November 1988   $23,388,700
  Limited Partnership

AEI Real Estate Fund XVI                   November 1987   $15,000,000
  Limited Partnership

AEI Real Estate Fund XV                    December 1986   $ 7,500,000
  Limited Partnership

AEI Real Estate Fund 86-A Limited          July 1986       $ 7,500,000
  Limited Partnership

AEI Real Estate Fund 85-B                  February 1986   $ 7,500,000
  Limited Partnership

AEI Real Estate Fund 85-A                  June 1985       $ 7,500,000
  Limited Partnership

Net Lease Income & Growth Fund             December 1984   $ 5,000,000
  84-A Limited Partnership


     The properties purchased by all of these programs were single-
tenant, net leased commercial properties. At December 31, 2004, these
programs had purchased or contracted to purchase 214 properties
located in 34 states for approximately $335,000,000. Of these
properties, 94 were in Southern states, 82 were in Midwest states, 28
were in Western states and 10 were in Northeast states. By cost
approximately 66% were restaurants and 34% were retail properties. By
cost approximately 73% were new or recently constructed properties
and 27% were existing properties.

                       25

     At December 31, 2004, these programs had sold 100 entire
properties and had completed 433 partial tenant-in-common sales,
involving an additional 54 properties. The programs received net sale
proceeds of approximately $215,400,000 and realized an average cash
gain on sale of 10.9% representing net sale proceeds minus the
original cost of the properties divided by the original cost of the
properties. Net sale proceeds represents gross sale proceeds reduced
by all sale expenses, including expenses paid to our managers and
affiliates. This calculation does not include any rental income
generated by the properties or any operating expense required by the
properties, nor does it reflect general expenses of the programs or
the participation in proceeds of the general partners or managers of
the programs.  Accordingly, it is not necessarily indicative of
return to investors. The weighted average holding period for these
properties was 6.3 years (weighted based on the original cost of the
properties). These results represent past performance, which is no
guarantee of future results.


[GRAPHIC:  Map of United States showing states where AEI funds
own properties]


     Upon request, for no fee, the managers will provide any
potential investor with a copy of the most recent Annual Report on
Form 10-KSB as filed with the Securities and Exchange Commission for
any of these programs and, upon payment of reasonable fees to cover
postage and handling, a copy of any of the exhibits to such Form 10-
KSB. These annual reports are also available at the SEC's web site at
www.sec.gov.

     During the three years ended December 31, 2004, affiliated
public programs that were still operating acquired a total of 42
properties, including 26 restaurants and 16 retail properties. All of
these properties were acquired for cash, without assumed or
additional indebtedness. Of these properties, 16 were in Southern
states, 14 were in Midwest states, 6 were in Western states and 6
were in Northeastern states. We have included more detailed
information about these properties in tables that are in Part II of
the registration statement that we have filed with the SEC and will
provide those tables to you, without charge, upon request. Investors
in AEI Fund 26 will not own any interest in any prior real estate
program and should not assume that they will see returns, if any,
comparable to those experienced in the prior real estate programs.

                       26

     Of the fifteen private programs formed and syndicated by Mr.
Johnson and affiliates, ten were formed more than 20 years ago to
purchase specified properties using leverage and their operations are
not comparable to the proposed operations of AEI Fund 26. Mr. Johnson
and affiliates have formed and syndicated five private real estate
programs during the past ten years that have purchased, for cash,
single-tenant properties under long-term net leases. With the
exception of size, holding period objectives and the ability to use
mortgage indebtedness for the acquisition of properties, all of these
programs are similar to AEI Fund 26. As of May 31, 2005,
approximately 700 investors purchased interests in the private
programs listed below for a total investment of $74,711,477.

Fund Name                                      Month         Capital
                                              Offering       Raised
                                             Completed


AEI Accredited Investor Fund V LP              Open        $ 5,299,185

AEI Accredited Investor Fund 2002          August 2004     $47,892,866
  Limited Partnership

AEI Private Net Lease Millennium Fund      June 2002       $14,680,036
  Limited Partnership

AEI Private Net Lease Fund 1998            November 1999   $ 5,441,303
  Limited Partnership

AEI Institutional Net Lease Fund '93       December 1998   $ 1,398,087


     The properties purchased by all of these private programs were
single-tenant, net leased commercial properties. At December 31,
2004, these programs had purchased or contracted to purchase 41
properties located in 20 states for approximately $63,700,000. Of
these properties, 16 were in Southern states, 15 were in Midwest
states, 6 were in Western states and 4 were in Northeast states. By
cost approximately 55% were restaurants, 31% were retail properties
and 14% were childcare centers. By cost approximately 59% were new or
recently constructed properties and 41% were existing properties.

     At December 31, 2004, these private programs had sold 3 entire
properties and had completed 83 partial tenant-in-common sales,
involving an additional 17 properties. The programs received net sale
proceeds of approximately $23,600,000 and realized an average cash
gain on sale of 25.1% representing net sale proceeds minus the
original cost of the properties divided by the original cost of the
properties. Net sale proceeds represents gross sale proceeds reduced
by all sale expenses, including expenses paid to our managers and
affiliates. This calculation does not include any rental income
generated by the properties or any operating expense required by the
properties, nor does it reflect general expenses of the programs or
the participation in proceeds of the general partners or managers of
the programs.  Accordingly, it is not necessarily indicative of
return to investors. The weighted average holding period for these
properties was 1.4 years (weighted based on the original cost of the
properties).  These results represent past performance, which is no
guarantee of future results.

     The programs sponsored by our managers and affiliates have owned
some properties leased to tenants that failed to fully perform under
the terms of their leases, including the timely payment of rent. When
a tenant defaults on its lease obligations, the managers take such
action as they deem prudent in commercial lease transactions. Such
actions may include termination of lease, after which the property
may be re-let to a new tenant or sold. If tenants fail to meet their
lease obligations, rental payments will likely be interrupted.
Although any such interruption may cause a decrease in distributions
of cash flow for a period of time, the programs have diversified
their acquisitions to reduce this risk. Because of this, no default,
or series of defaults, has caused a public program sponsored by our
managers to miss a quarterly cash distribution to investors or to
have inadequate cash to fund operations. It is a continuing objective
of our managers to minimize tenant defaults through careful property
evaluation of the creditworthiness of tenants and by renegotiating
leases or locating new tenants with the intent of minimizing any
interruption of rents. More detailed information about these
properties is included in Exhibit B to this prospectus.

                       27

               COMPENSATION TO MANAGERS AND AFFILIATES

     AEI Fund Management XXI and AEI Fund Management will provide
nearly all of the operational services we require and will be
compensated accordingly. AEI Securities will coordinate the sale of
units and will receive commissions and a nonaccountable expense
allowance, most of which will be paid or "re-allowed" to other broker-
dealers that solicit subscriptions for the program. AEI Fund
Management will provide administrative services and we will reimburse
AEI Fund Management for all of its expenses in furnishing services at
its "cost," including a portion of its general expenses directly
related to the furnishing of these services. AEI Fund Management XXI
will receive an organization fee to compensate it for organizing AEI
Fund 26 and for the risk it incurs in paying the expenses of AEI Fund
26 before escrowed funds can be released. In addition, AEI Fund
Management XXI and Robert P. Johnson, as our managing members, will
receive an interest in net cash flow and net proceeds from sale of
properties. Robert P. Johnson, the individual manager, is the
President, CEO and director of AEI Fund Management XXI, AEI Fund
Management and AEI Securities.  Mr. Johnson is also the sole
shareholder of AEI Fund Management and the majority shareholder of
AEI Capital Corporation, which is the sole shareholder of AEI Fund
Management XXI and AEI Securities.

     The following table describes the forms of compensation,
distributions and cost reimbursements that we will, or may, pay to
AEI Fund Management XXI, AEI Fund Management and AEI Securities for
their services in connection with our organization, operation and
liquidation, assuming the minimum 150,000 units and the maximum
10,000,000 units are sold. The following arrangements were formulated
by our managers and are not the result of arm's-length negotiations.

PERSON OR ENTITY       FORM AND METHOD OF        ESTIMATED DOLLAR AMOUNT
   RECEIVING             COMPENSATION
  COMPENSATION
                        OFFERING STAGE

AEI Securities     Selling commissions of         $10,100,000 maximum and
                   6.5% of proceeds, all          $157,500 minimum, all but
                   of which will be reallowed     approximately $3,500,000
                   to participating dealers,      (maximum) and $52,500
                   a nonaccountable expense       (minimum) of which is
                   allowance of 3.5% of           expected to be reallowed.
                   proceeds, which will be
                   used to cover wholesaling
                   and other marketing costs
                   of the dealer manager and a
                   portion of which may be
                   reallowed to participating
                   dealers, and up to a 1/2% due
                   diligence allowance, all of
                   which will be reallowed to
                   participating dealers.


Managers and       Reimbursement  for             Estimated $2,700,000
Affiliates         other organization and         maximum and $67,500
                   offering expenses (1),         minimum, but subject to
                   plus a 1.5% organizational     limitation (2).
                   fee, but only to the extent
                   total commissions and
                   offering expenses do not
                   exceed 5.0%.

                      PROPERTY ACQUISITION STAGE

Managers and       Reimbursement at cost for      Estimated $1,550,000
Affiliates         all acquisition expenses       maximum and $25,500
                   (3).                           minimum, but subject to
                                                  the limitation (3).

                            OPERATING STAGE

Managers           Three percent (3%) of net      Not presently
                   cash flow.                     determinable.

Managers and       Reimbursement at cost for      Estimated $1,000,000
Affiliates         all administrative             maximum and $50,000
                   expenses, including all        minimum.  The cumulative
                   expenses related to            amount of such expense
                   management and disposition     reimbursements for
                   of properties and all other    general overhead of the
                   transfer agency, reporting,    managers and affiliates,
                   investor relations and         and for controlling
                   other administrative           person expenses, together
                   functions (4).                 with front-end fees and
                                                  sales expenses, are
                                                  subject to limitation
                                                  (4).


                       28

                   PROPERTY SALE OR FINANCING STAGE

Managers           1% of distributions of net     Not presently
                   proceeds of sale until         determinable.
                   investors have received an
                   amount equal to (a) their
                   "adjusted capital
                   contributions," plus (b) an
                   amount equal to 6.5% of
                   their adjusted capital
                   contributions per annum,
                   cumulative but not
                   compounded, to the extent
                   not previously distributed.
                   10% of distributions of net
                   proceeds of sale
                   thereafter.


1. Includes federal and state securities registration fees, fees of
   counsel, accountant's fees, printing expenses, and other out-of-
   pocket expenses paid to non-affiliates.

2. To the extent organization and offering expenses, including
   payments to AEI Securities and third parties, when added to
   acquisition expenses exceed 20% of the capital contributions, they
   will be borne by the managers.

3. Acquisition expenses include amounts paid for legal fees, travel
   and communication, appraisal costs, accounting fees, title
   expenses and other expenses in acquiring properties. These
   expenses will be paid at "cost," which includes the time spent by
   the manager's employees in performing these services.

4. Subject to the limitations set forth in Section 6.2b of the
   operating agreement, we will reimburse our managers and their
   affiliates at cost for administrative expenses in managing all our
   operations. These expenses include costs they incur in providing
   services for the acquisition, leasing and operation of our
   properties, including:

       the salaries, fees and expenses paid to employees and
       consultants of our managers and their affiliates for work they
       perform on our behalf; and

       office rent, telephone, travel, employee benefit expenses and
       other expenses attributable to providing such services.

     Our managers allocate and charge us for a majority of these
expenses based upon the number of quarter-hour increments devoted by
their employees to our affairs, as recorded on employee daily time
records. They allocate some expenses at the end of each month based
upon the number of our investors and our capitalization as compared
to other programs that they manage. Our managers have committed that
they will not obtain expense reimbursements for general overhead and
for controlling person expense to the extent the reimbursements
exceed, together with Front-End Fees and sales expenses, the sum of
20% of capital contributions, 1% of revenues from properties, plus 3%
of revenues for the first five years of each lease, a 3% sales
commission, and 7% of net cash flow.

     We will not pay real estate commissions to our managers or their
affiliates for the purchase or sale of any of our properties. We
will, however, compensate our managers and their affiliates at their
cost, subject to the limitations set forth in the preceding table and
in Section 6.2 of our operating agreement, for all expenses they
incur in connection with the purchase and sale of properties. These
expenses may include bonus compensation to non-controlling employees.
We will not pay acquisition fees to our managers. Further, we will
not compensate our managers or their affiliates for services not
described in the table above and will not allow the managers to
receive any rebates or engage in reciprocal business arrangements
through AEI Fund 26.

                        CONFLICTS OF INTEREST

     AEI Fund 26 will not have any employees, but will, instead, be
dependent upon its managers, and particularly on AEI Fund Management,
an affiliate of its managers, for most of the services required for
its operations. Robert P. Johnson, our special managing member, is
also the President, CEO, and director of our managing member, AEI
Fund Management and AEI Securities, the dealer manager, is the sole


                       29

shareholder of AEI Fund Management and is the majority shareholder of
AEI Capital Corporation, which is the sole shareholder of AEI Fund
Management XXI and AEI Securities. Our investors will not have any
interest in any of these entities and will not be in a position to
control their activities. The interlocking interests of our managers
and affiliated entities create a number of conflicts of interest,
including the following:

LACK OF ARM'S-LENGTH NEGOTIATIONS WITH MANAGEMENT

     Our managers will receive substantial reimbursements for the
cost of providing services to AEI Fund 26 and may realize income from
AEI Fund 26 during our operations and upon our liquidation. Our
agreements and arrangements with the managers and with their
affiliates, including those relating to compensation, were not
negotiated at arm's-length. Although the aggregate amount of
reimbursements our managers may receive is limited by our operating
agreement, the amount of services that our managers provide, and
therefore the amount of reimbursement they receive within these
limits, will be determined in the first instance by our managers. Our
managers believe that payment for services based upon actual
reimbursement of costs allows AEI Fund 26 to operate with lower
overall administrative expense than would occur if they were
reimbursed based upon the fixed fees represented by the limits placed
in the operating agreement. Further, and consistent with their
fiduciary obligations, the managers believe that their interest in
cash flow provides an incentive not to overcharge AEI Fund 26, and
the managers intend to make decisions regarding allocation of
services in the best interest of AEI Fund 26.

     The interests of our managers and our investors with respect to
the timing and price of any sale of our properties may also conflict
because a significant portion of our managers' compensation will not
be payable until the sale of properties. Nevertheless, our managers
believe their inability to share substantially in sale proceeds
unless there is significant appreciation in the value of the
properties provides an incentive to maximize proceeds both to the
managers and the investors.

OTHER REAL ESTATE ACTIVITIES OF MANAGERS

     Our managers and their affiliates are actively engaged in the
commercial real estate business as general partners or managing
members in eleven other operating publicly syndicated, and four
privately placed programs. Mr. Johnson also intends to offer
additional real estate programs in the future through companies with
which he is affiliated. We will not have independent management but
will rely upon our managers and their affiliates for our operations.
Our managers will devote only so much of their time to our business
as, in their judgment, is reasonably required and are not required to
devote any minimum amount of time to our operations. We anticipate
that, although Mr. Johnson may devote up to 30% of his time to our
business while we are offering units and acquiring property, he may
devote less than 10% of his overall work time after properties are
acquired. The allocation by our managers of their time, services and
functions among current programs and future programs they might
sponsor, as well as other business ventures in which they may be
involved, may create conflicts of interest. Our managers believe that
they have, or can retain directly or through affiliates, sufficient
staff to be fully capable of discharging their responsibilities to
all programs with which they are affiliated.

COMPETITION WITH MANAGERS AND OTHER AFFILIATED PROGRAMS FOR PURCHASE
AND SALE OF PROPERTIES

     Our managers and their affiliates may engage in other business
ventures, including forming and sponsoring other public or private
programs, and neither AEI Fund 26 nor any of our investors will be
entitled to any interest in those programs.

                       30

     It is possible that we will periodically have money available to
acquire additional properties at the same time as other programs
sponsored by our managers or their affiliates. If this happens,
conflicts of interest will arise as to which program should acquire a
particular property. Our managers will review the investment
portfolio of each program and will make a decision as to which
program will acquire the property on the basis of several factors,
including:

     the cash flow requirements of each program;

     the degree of diversification of each program;

     the estimated income tax effects of the purchase on each
     program;

     the amount of funds available to each program; and

     the length of time such funds have been available for
     investment.

     If funds are available in two or more programs to purchase the
same property, and the factors enumerated above have been evaluated
and deemed equally applicable to each program, the property will be
acquired by the program that first reached its minimum investment
level. Any other conflicts will be resolved by our managers in their
sole discretion.

     Conflicts of interest may arise when we attempt to sell or rent
our properties. Our managers may sell less than a 100% interest in a
property and we may then own a fractional interest in that property.
Our managers may be forced to choose between selling a property we
hold and a property held by the manager or by an affiliated program.
Such conflicts will be resolved by our managers, in their sole
discretion, after consideration of the investment objectives of the
program holding the property and the length of time until the planned
final disposition of properties. Our managers may allow the sale of a
fractional interest they hold or that is held by an affiliated
program prior to the sale of an interest we hold. We cannot assure
you that the terms of sale of fractional interests in a property sold
at different times will be the same.

POSSIBLE JOINT INVESTMENT WITH AFFILIATED PROGRAMS

     We may invest in property jointly with another program sponsored
by our managers or their affiliates under the conditions described in
"Investment Objectives and Policies-Joint Venture Investments."
Although we may make these joint investments only with another
program with similar investment objectives and compensation
structure, the programs may have different objectives with respect to
the timing of disposition of the properties or the level of short-
term, versus long-term income from the properties. The same personnel
from our managers and their affiliates will make all of the decisions
for the joint investment and may have conflicting duties to act for
the benefit of AEI Fund 26 and for the other program that is party to
the joint investment. In such a situation, conflicts of interest
could arise between the joint venture partners.

MANAGER'S REPRESENTATION OF FUND IN AUDIT PROCEEDINGS

     Our managing member will act as the "tax matters partner"
pursuant to Section 6231 of the Internal Revenue Code. This grants
our manager discretion and authority regarding extensions of time for
assessment of additional tax against the investors related to our
income, deductions or credits and for settlement or litigation of
controversies involving such items. The positions taken by the
manager on tax matters may have differing effects on the managers and
our investors. It is possible that in some disputes the interests of
our managers will actually be adverse to the interests of our
investors. Any decisions made by our managers with respect to these
matters will be made in good faith consistent with its fiduciary
duties to us and our investors. Our managing member, to the extent
its actions as tax matters partner are in good faith and reasonably
intended to be in our best interests and subject to the
indemnification and exculpation language contained in our operating
agreement, may be entitled to indemnity for liability incurred as a
result of their actions on tax matters.

LACK OF SEPARATE REPRESENTATION

     Our managers and our investors are not represented by separate
counsel. Our managers' counsel will provide services to the managers
relating to AEI Fund 26. The attorneys and accountants who perform
services on behalf of the managers also perform services for AEI
Securities and other affiliates of the managers. Without independent
legal representation, you might not receive legal advice regarding

                       31

matters that might be in your interest but contrary to the interest
of our managers and their affiliates. Should a dispute arise between
AEI Fund 26 and our managers or their affiliates - or should
negotiations or agreements between AEI Fund 26 and our managers,
other than those existing or contemplated on the effective date of
this prospectus, be necessary - our managers will cause AEI Fund 26
to retain separate counsel. Any future agreement between AEI Fund 26
and the managers or their affiliates will provide that it may be
terminated at the option of AEI Fund 26 upon 60 days' notice without
penalty to AEI Fund 26.

AFFILIATION OF SELLING AGENT

     AEI Securities, an affiliate of our managers, is serving as
"Dealer Manager" for the offering of units. Normally, the dealer
manager or underwriter of securities would perform an arms-length
investigation of an issuer of securities to make certain that the
offering and related documents are accurate and complete. In our
case, the "due diligence" investigation customarily performed by an
underwriter is being performed by an affiliate of the managers. AEI
Securities believes, however, that such due diligence has, in fact,
been exercised. Moreover, under Rule 2810(b)(2) of the NASD Conduct
Rules, each investment firm that sells units has an obligation to
make an appropriate independent inquiry about the offering.

EXPENSE REIMBURSEMENTS

     Our managers and their affiliates are reimbursed at their cost
for the services they perform upon our behalf. The aggregate cost of
such reimbursements can total as much as the fees and increased
interest in net cash flow the managers are allowed to be paid under
applicable state regulation.

               CASH DISTRIBUTIONS AND TAX ALLOCATIONS

CASH DISTRIBUTIONS

     Our managers intend to make distributions of available net cash
flow, if any, within 30 days after the end of each calendar quarter.
Our objective is to acquire net leased properties that will generate
partially tax deferred cash distributions that result from the
depreciation deductions that the properties will generate. Any net
cash flow from operations for each fiscal year will be distributed
97% to investors and 3% to our managers.

     When we sell, refinance, or otherwise dispose of any of our
properties, we are allowed to reinvest the net proceeds from the sale
or refinancing in other properties. If we do not reinvest, we will
distribute the net proceeds from the sale or refinance as follows:

     first, 99% to the investors and 1% to the managers until the
     investors have received an amount from net sales proceeds equal to
     the total of their capital contributions (adjusted for previous
     distributions from sale) plus an amount equal to a 6.5% per annum
     return on their adjusted capital contributions, cumulative but not
     compounded, to the extent the 6.5% return has not been previously
     distributed to them from sales proceeds or cash flow; and

     any remaining balance will be distributed 90% to the investors
     and 10% to the managers.

     The 1% unsubordinated interest in net proceeds of sale received
by our managers for a $1,000 capital contribution is not
proportionate to the interest that would be received by an investor
with the same capital contribution.

TAX ALLOCATIONS

     For income tax purposes, we will allocate all income, profits,
gains and losses for each fiscal year, other than any gain or loss
realized upon the sale, exchange or other disposition of any
property, as follows:

     net loss will be allocated 99% to the investors and 1% to the
     managers so long as the investors have positive balances in their
     capital accounts. If their capital accounts are reduced to zero, all
     losses will be allocated to the managers; and

     net income will be allocated 97% to the investors and 3% to the
     managers.

                       32

     For income tax purposes, the gain realized upon the sale,
exchange or other disposition of any property will be allocated as
follows:

     first, to and among the investors in an amount equal to the
     negative balances in their respective capital accounts (pro rata
     based upon the relative amounts of such negative balances);

     then, 99% to the investors and 1% to the managers until the
     balance in each investor's capital account equals the sum of such
     investor's Adjusted Capital Contribution plus an amount equal to a
     6.5% per annum return on such investor's Adjusted Capital
     Contribution, cumulative but not compounded, to the extent not
     previously distributed; and

     the balance of any remaining gain will then be allocated 90% to
     the investors and 10% to the managers.

     For income tax purposes, any loss on the sale, exchange or other
disposition of any property shall be allocated 99% to the investors
and 1% to the managers.


                  FEDERAL INCOME TAX CONSIDERATIONS

     The following summary of material U.S. federal income tax
considerations is based upon current law, which is subject to change
(including retroactive changes) or to possible differing
interpretations. It is not intended as a complete analysis of all
potential federal income tax considerations relating to your
purchase, ownership and disposition of units, and does not address
all aspects of taxation that may be relevant to you in light of your
individual circumstances. This summary specifically does not address
the effect of any foreign, state or local tax laws. Unless otherwise
expressly indicated, this summary applies only to investors who are
individuals who are citizens or residents of the United States and is
not addressed to corporate investors or to certain other types of
investors subject to special treatment under federal income tax laws
(such as persons not citizens or residents of the United States, tax-
exempt entities, partnerships or other pass-through entities, dealers
in securities, or dealers in commodities).

     Dorsey & Whitney LLP has rendered an opinion to our manager that
the discussions set forth in this section and under the heading "Risk
Factors - Federal Income Tax Risks" correctly summarize the material
federal income tax considerations as of the date of this prospectus
to potential investors of the purchase, ownership and disposition of
units in AEI Fund 26. You should be aware, however, that the opinion
of Dorsey & Whitney LLP is subject to the qualifications and
assumptions set forth in the opinion and in this prospectus, is based
upon facts described in this prospectus, relies upon certain
certifications of our manager and is based upon current legislative,
judicial and administrative interpretations of existing federal
income tax law. In addition, the opinion represents counsel's legal
judgment and is not binding upon the Internal Revenue Service or the
courts.

     We urge you to consult your own tax advisor regarding the
federal, state, local and foreign tax consequences to you of the
purchase, ownership and disposition of units in light of your
individual tax circumstances.

TAX STATUS OF AEI FUND 26

     AEI Fund 26 will be treated as a partnership for federal income
tax purposes. Partnerships that are classified as "publicly traded
partnerships" are treated as corporations for federal income tax
purposes. AEI Fund 26 should not be classified as a publicly traded
partnership either because its units are not and, under the terms of
the operating agreement cannot be, traded on an established
securities market, on a secondary market or on the substantial
equivalent of a secondary market, or because it meets another
exception to the publicly traded partnership rules.

TAXATION OF PROFITS AND LOSSES OF AEI FUND 26

     You must report on your income tax return your allocable share
of our income, gains, losses, and deductions for each taxable year,
even if we do not make any cash distributions to you. On your return,
you either must report items we allocate to you consistently with the
treatment on our information return or must identify and explain any

                       33

inconsistency to the Internal Revenue Service. Your allocable share
of such items will be determined under the terms of our operating
agreement that are summarized under "Cash Distributions and Tax
Allocations-Tax Allocations."  The allocations under our operating
agreement should be given effect for federal income tax purposes in
determining how our income, gains, losses, deductions, and credits
will be allocated among investors.

LIMITATIONS ON DEDUCTIBILITY OF LOSSES

     Your ability to deduct losses allocated to you by AEI Fund 26 is
limited by several rules. You may deduct losses only to the extent of
your adjusted tax basis in your units. Your adjusted tax basis in
your units generally equals the amount that you paid for the units
increased by income or gains allocated to you with respect to the
units and decreased (but not below zero) by distributions, deductions
and losses allocated to you with respect to the units.

     You may only deduct losses to the extent of your "at-risk"
amount, which is calculated in a manner that is similar to the
calculation of your adjusted tax basis, except that the "at risk"
amount does not include any amount borrowed on a non-recourse basis
by AEI Fund 26 or from someone with an interest in AEI Fund 26.

     You may deduct capital losses only to the extent of your short-
term or long-term capital gains for the year, plus $3,000. You may,
therefore, not be able to deduct all of the losses allocated to you
in the year in which those losses are allocated. You generally may
not carry back capital losses to offset gains in prior years. Capital
losses that you cannot deduct in any year are carried over
indefinitely to future years.

PASSIVE -ACTIVITY LOSS RULES AND THEIR EFFECT ON THE TREATMENT OF
INCOME AND LOSS

     Our manager expects that most of the income or losses allocated
to you by AEI Fund 26 will constitute income or losses from passive
activities. You may generally deduct losses from passive activities
only to the extent of your income from passive activities. Passive
activity losses that are not allowed in any taxable year are
suspended and carried forward indefinitely and allowed in subsequent
years as an offset against passive activity income in future years.
Suspended losses generated by AEI Fund 26, if any, will become
deductible in full upon the liquidation of AEI Fund 26 or when an
investor disposes of all of its units in a fully taxable transaction.

     We may earn income on the investment of the proceeds of this
offering before we purchase properties or from other working capital
investments. That income will be treated as portfolio income, which
cannot be offset with losses from passive activities, including our
rental activities.

     Recently enacted rules also may place limits on losses generated
by any tax-exempt use property held by AEI Fund 26.  A portion of the
properties owned by AEI Fund 26 may be treated as tax-exempt use
property if tax-exempt entities invest in the fund.  Under these
rules, losses generated by a particular tax-exempt use property may
be used only to offset income and gain generated by that same
property.  Losses that are disallowed in one tax year under these
rules will be carried over and may be used to offset income and gain
generated from that property in future years.  These rules may also
limit the ability of an investor to offset passive losses from other
sources against income from AEI Fund 26 if those losses arise from
tax exempt use property placed into service after March 12, 2004.
The rules would generally not limit the ability of an investor to
offset net income from Fund 26 with passive losses from other
investments that are not generated by tax exempt use property.

DEPRECIATION

     We will depreciate our properties for tax purposes as required
by the Internal Revenue Code. Nearly all of our properties will be
depreciated over 39- or 40-year recovery periods, using the straight-
line method. Our depreciation deductions will reduce our taxable
income, and will reduce our adjusted basis in the properties, which
will increase the potential gain (or decrease the potential loss)
recognized upon the sale of the properties. We expect to depreciate a

                       34

small portion of the properties we purchase, attributable to
equipment and land improvements, over a period of 5 to 15 years.

LEASES

     For some situations, the Internal Revenue Service has taken the
position that certain lease transactions should be treated as
financing transactions rather than as true leases. We intend to
structure all of our lease transactions, including any sale-leaseback
transactions, so that our leases will be characterized as "true
leases" and we will be treated as the owner of the properties in
question for federal income tax purposes. We will not seek an advance
ruling from the Internal Revenue Service or obtain an opinion of
counsel regarding this characterization, however, and a determination
by the Internal Revenue Service to the contrary could result in
substantial adverse tax consequences to investors. For example,
investors could be deprived of deductions for depreciation and cost
recovery, and income derived from lease transactions in which we are
not treated as the owner of the leased properties would not be
passive activity income that could potentially be offset by passive
activity losses that we generate or that result from your investments
in other passive activities.

     In addition, tax rules may require us to accrue a constant
amount of rental income from certain lease agreements into which we
may enter despite changes in rental rates or may require recapture on
the disposition of the properties subject to the lease agreements. If
we enter into such a lease agreement, we could be required to
recognize more income in a year than we actually receive in that
year.

ORGANIZATIONAL AND SYNDICATION COSTS AND OTHER EXPENSES

     Expenses incurred in connection with either organizing AEI Fund
26 or syndicating interests in AEI Fund 26 are generally not
currently deductible, with the exception that we may elect to deduct
$5,000 of organizational expenses.  The $5,000 limit will be reduced
if our total organizational expenses exceed $50,000.  Organizational
expenses in excess of the deductible amount may be amortized and
deducted ratably over 180 months. Syndication expenses are neither
deductible nor amortizable and include costs and expenses incurred in
connection with promoting and marketing the units. The Internal
Revenue Service may attempt to recharacterize certain costs and
expenses which our manager intends to deduct or amortize as
nondeductible syndication expenses.

     Our manager will allocate our expenses between those that are
paid for ordinary and necessary business expenses, which are
currently deductible, and those that must be added to the purchase
price of our properties, which must be amortized and deducted over
time.  The Internal Revenue Service may challenge these allocations.

DISTRIBUTIONS

     As indicated above, you will be required to report on your
income tax return your share of our income and gains, even if we do
not make any distributions of cash to you.  You will not also be
taxed on distributions or partial redemption payments unless the
aggregate amount you receive exceeds your adjusted tax basis in all
of your units. If you receive distributions in excess of your
adjusted tax basis, you will recognize gain equal to the excess.

     Tax rules do not permit recognition of a loss upon a partial
redemption of your units. If you receive a cash payment in complete
redemption of all of your units, you will recognize gain or loss for
federal income tax purposes equal to the difference between the
amount of cash you receive and your adjusted tax basis in your units.
The gain or loss will be characterized as long-term or short-term
capital gain or loss depending upon whether you held the units for
more than one year, except for that portion of any gain or loss
attributable to your share of our "unrealized receivables" and
"inventory items," as defined in the Internal Revenue Code, which
portion would be taxable as ordinary income or loss.


                       35

SALE OF PROPERTIES

     Upon the sale of any of our properties, we will recognize gain
or loss to the extent that the amount realized is more or less than
the adjusted basis of the property sold. The amount realized upon the
sale of one of our properties will generally be equal to the sum of
the cash received plus the amount of indebtedness encumbering the
property, if any, assumed by the purchaser or to which the property
remains subject upon the transfer of the property to the purchaser.
The adjusted basis of partnership property will in general be equal
to the original cost of the property less depreciation and cost
recovery allowances allowed with respect to the property.

     Assuming that we are not deemed to be a dealer with respect to
our properties, an investor's allocable share of the gains or losses
resulting from the sale of any of our properties that we have held
for at least one year would generally be combined with any gains or
losses realized by the investor in that year from the sale of other
depreciable or real property used in a trade or business, and the net
gain or loss from those sales will generally be treated as long-term
capital gain or ordinary loss. Depreciation or cost recovery
allowance recapture could cause a portion of those gains to be
treated as ordinary income. The amount of taxable gain allocated to
an investor with respect to the sale of one of our properties may
exceed the cash proceeds received by that investor with respect to
the sale.

LIQUIDATION

     The operating agreement provides that investors will receive
only distributions of money and no distributions of property upon the
liquidation of AEI Fund 26. Upon your receipt of a liquidating
distribution of money, you will recognize gain or loss to the extent
that the amount of the distribution is more or less than the adjusted
basis of your units. The gain or loss will be characterized as long-
term or short-term capital gain or loss depending upon whether you
held the units for more than one year, except for that portion of any
gain or loss attributable to your share of our "unrealized
receivables" and "inventory items," as defined in the Internal
Revenue Code, which portion would be taxable as ordinary income or
loss.

SALE OF UNITS

     You may be unable to sell any of your units because no active
trading market exists for the units and the operating agreement
imposes substantial restrictions on transfer. If you sell any units,
however, you will recognize gain or loss equal to the difference
between the amount realized on the sale and your adjusted tax basis
in the units sold. The amount realized on the sale is the sum of any
money and the fair market value of any property you receive in
exchange for the units plus your share of partnership liabilities.
Assuming that you have held the units for more than 12 months, your
gain or loss will be long-term capital gain or loss, except for that
portion of any gain or loss attributable to your share of our
"unrealized receivables" and "inventory items," as defined in the
Internal Revenue Code, which portion would be taxable as ordinary
income or loss.

ALTERNATIVE MINIMUM TAX

     Alternative minimum tax is payable to the extent that a
taxpayer's alternative minimum tax liability exceeds the taxpayer's
regular federal income tax liability for the taxable year. The amount
of alternative minimum tax imposed depends upon various factors
unique to each particular taxpayer. Accordingly, you should consult
with your own tax advisor regarding the possible application of the
alternative minimum tax in your individual circumstances.

FUND AUDIT PROCEDURES

     If the Internal Revenue Service audits AEI Fund 26, our manager
will take primary responsibility for contesting any proposed federal
income tax adjustments. If an audit results in an adverse adjustment,
you may be required to pay additional taxes, interest and penalties.
Our manager may also extend the statute of limitations as to all
investors and, in certain circumstances, bind each investor to such

                       36

adjustments. Although our manager will attempt to inform each
investor of the commencement and disposition of any such audit or
subsequent proceedings, you should be aware that your participation
in tax administrative or judicial proceedings relating to AEI Fund 26
will be substantially restricted.

TAX SHELTER REGULATIONS

     Any entity deemed to be a "tax shelter," as defined by the
Internal Revenue Code, is required to register with the Internal
Revenue Service. The "tax shelter" definition is complex, but
generally applies to investments in which an investor expects to be
allocated deductions significantly in excess of the investor's
capital contributions during the first five years of the investment.
AEI Fund 26 is not intended to constitute a "tax shelter," as so
defined, and our managers have determined that, based upon its
characteristics, AEI Fund 26 is not required to be registered as a
"tax shelter."


FOREIGN INVESTORS

     This discussion is not intended to describe tax consequences of
an investment in AEI Fund 26 by foreign investors. Nonetheless, you
should understand that foreign investors could be subject to tax and
to withholding of taxes by AEI Fund 26 under the Foreign Investment
in Real Property Tax Act of 1980 and other relevant provisions of the
Internal Revenue Code.

                      RESTRICTIONS ON TRANSFER

     We do not expect a public market for the units to develop. You
should not expect to be able to easily sell your units or use them as
collateral for a loan. If you wish to sell your units, you might not
be able to find a buyer due to market conditions or the general
illiquidity of the units. Moreover, if you are able to sell your
units, dependent upon the price negotiated, you might receive less
than your original investment. We cannot assure you that your units
can be resold for their original purchase price.

     Our operating agreement allows transfers, other than "permitted
transfers," only if they comply with certain safe harbors created by
the IRS from treatment of AEI Fund 26 as a "publicly traded
partnership" for tax purposes.

     Our operating agreement also prohibits us from transferring
units that you sell unless you confirm, directly (not through a power
of attorney), that you know the most recent repurchase price that we
were offering prior to your proposed sale. The operating agreement
provides that your agreement to sell your units without this
information is void. Our operating agreement requires this
information because our managers believe that investors in other AEI
Funds have been defrauded into selling units at well below their
value by persons who withheld this information.

     You must also provide us with 15 days written notice before you
can complete a sale of your units. We have the right to purchase your
units upon the same terms that you propose to sell them to a third
party by notifying you in writing during this 15 day period. This may
render it more difficult for you to sell your units. Under our
operating agreement, we will require any substituted investor to
agree in the instrument of assignment to become an investor and to
pay reasonable legal fees and filing costs in connection with his
substitution as an investor. We will recognize transfers of units
only as of the last day of the month in which we receive written
evidence regarding the assignment in form satisfactory to our
managers.

                   SUMMARY OF OPERATING AGREEMENT

     Your rights as a member in AEI Fund 26 are established and
governed by the operating agreement that is enclosed with this
prospectus as Exhibit A. The subscription agreement that you must
sign to invest in this Fund includes a power of attorney that gives
our managers the power to sign the operating agreement on your
behalf.

                       37

     This section of the prospectus, together with the sections
referenced in the next paragraph below, summarizes all of the
material provisions of the operating agreement. It is not, however,
as complete or as detailed as the operating agreement itself. You
should carefully review the operating agreement with your advisors.

     Some provisions of the operating agreement are described in
     other sections of this prospectus:

     For a discussion of compensation and payments to our managers
     and their affiliates, see "Compensation to Managers and Affiliates."

     For a discussion of the distribution of cash and the allocation
     of profits and losses for tax purposes, see "Cash Distributions and
     Tax Allocations."

     For a discussion of investment objectives and policies, see
     "Investment Objectives and Policies."

     For a discussion of the liability of our managers for their acts
     or omissions and the indemnification of the managers, see
     "Managers-Fiduciary Responsibility."

     For a discussion of rights of our managers to withdraw, or of
     our investors to remove a manager, see "Managers-Management."

     For a discussion of the reports to be received by the investors,
     see "Reports to Investors."

TERM AND DISSOLUTION

     Our operating agreement provides that we will be dissolved and
liquidated at any of the following times or events:

     December 31, 2055;

     the decision of investors holding a majority of the units;

     the final sale or disposition of our assets;

     the final decree of a court that dissolution is required under
     law; or

     if all our managers withdraw or are expelled and no successor is
     appointed.

RETURN OF CAPITAL

     Prior to dissolution and liquidation, you will not have the
right to demand the return of your investment unless we are unable to
fully utilize the offering proceeds, either by purchasing properties
or through joint ventures with other similar programs.

VOTING RIGHTS

     As a limited member, you will have the right to vote on and
approve the following matters:

     amendments to our operating agreement;

     removal of either or both of our managers;

     election of a new manager;

     the sale of all or substantially all of our assets;

     dissolution by our members; or

     changes in our investment objectives.

     Investors may vote at a meeting or by written consent. In either
case, the vote of the holders of the majority of the units
outstanding will decide each matter, except that any amendment to the
operating agreement that adversely affects our managers may not be
approved without their consent.


                       38

MEETINGS

     Periodic meetings of our investors are not required and we
currently do not intend to hold meetings. Our managers may, however,
call a meeting at any time and are required to call a meeting if
investors holding at least 10% of the units properly request a
meeting. After receipt of a request for a meeting, our managers are
required to send notice to all investors of the meeting within 10
days and hold the meeting at the time requested (which must be more
than 15 days and less than 60 days after the request).

REPURCHASE OF UNITS

     Starting 36 months after the date of this prospectus, and
subject to certain conditions discussed in the operating agreement,
we will repurchase an investor's unit(s) upon proper written request.
The repurchase price will be equal to 100% of the net value per unit
in the case of units of a deceased investor, who is a natural person,
including units held by the investor in an IRA or other qualified
plan, and 85% of the net value per unit for other repurchases.  Net
value per unit will be estimated by our managers based on methods
they believes are reasonable.  In most cases, our managers will
estimate value per unit by adding the value of individual properties
that we hold to any other assets, such as cash, subtracting any
liabilities we have outstanding, subtracting the interest of our
managers, and dividing the result by the number of units outstanding.
Our managers normally estimate the value of individual properties we
hold by dividing the annual rental income for the property by
capitalization rates for comparable properties sold by affiliates of
our managers, or known to our managers in the marketplace.
Properties are then reviewed to determine that the capitalization
rate also reflects circumstances that may be unique to each specific
property. For example, if a lease contains an option for the tenant
to purchase the property at a price that is less than the capitalized
rents, the option price will be used for valuation purposes. If a
property is vacant, the marketability of the property is analyzed and
a discount factor is applied to the original property acquisition
price or, if there is existing market interest in a vacant property,
the merit of such interest is reviewed and the valuation is adjusted
accordingly.  Our managers will calculate and make available to you
as soon as possible after the first business day of January and July
of each year the net value per unit, as well as the price at which
units may be presented for repurchase.

     To have your units repurchased, you or your representative must
submit a written request to our manager. If your testamentary estate
or heirs are requesting the repurchase, the written notice must be
received within 180 days after your death. If the units are held
jointly and either of the joint owners dies, the written request for
repurchase may be made by the surviving joint owner. If the investor
is a trust, partnership, corporation or similar entity, and/or the
units were not acquired directly from the Company, these rights for
repurchase upon death do not apply. For all other repurchases, if you
want your units repurchased, you must submit a written request
stating the number of units you want repurchased. You must mail the
request after January 1 but before January 31, or after July 1 but
before July 31 of the year of repurchase.

     We will repurchase units on March 31 and September 30 of each
year based on the value at the beginning of the repurchase period.
You will not be entitled to distributions from the beginning of the
repurchase period to the date of repurchase and any distributions you
receive will be deducted from the repurchase price that is paid to
you. Any investor who tenders units that are not repurchased must re-
tender the units in succeeding periods if he or she wants the request
reconsidered.

     Our obligation to repurchase units is limited in any year to 2%
of the number of units outstanding at the beginning of the year of
repurchase. If investors tender units totaling more than 2% of the
units outstanding at the beginning of the year, we will honor
repurchase requests with the earliest postmarks first. We are not
obligated to repurchase any unit(s) if doing so would, in the
discretion of our managers, impair our operations.

     We will pay for repurchases out of either revenues otherwise
distributable to investors or from borrowings. We cannot assure you
that revenues or borrowings will be available for repurchases, that
we will be able to repurchase any or all of the units tendered, or
that our managers will not suspend repurchases. A repurchase will
result in smaller distributions to remaining investors in the year of
repurchase, but will not result in a reduction of taxable income or

                       39

gains to such investors. A repurchase will, however, result in the
remaining investors owning a proportionately larger interest in AEI
Fund 26. A repurchase may result in certain adverse tax consequences
to the tendering investor.

DISTRIBUTION REINVESTMENT PLAN

     We have established a distribution reinvestment plan for
investors who elect in writing to have their distributions of our
cash reinvested in additional units during the period of this
offering. Our managers, in their discretion, may decide at any time
to terminate the reinvestment plan. Our reinvestment plan allows
participating investors to directly purchase additional units at the
offering price of $10.00 per unit.

     No distributions accruing to an investor who participates in the
reinvestment plan prior to release of funds from escrow and execution
of the operating agreement will be reinvested. All other
distributions to participants in the reinvestment plan will be
reinvested within 30 days after the date of the distribution,
provided that:


     the sale of units continues to be registered or qualified for
     sale under federal and applicable state securities laws;

     each participant has received a current copy of this prospectus,
     including any supplements; and

     there has been no distribution of sales or refinancing proceeds
     to investors.

     The reinvestment plan will terminate upon completion of this
offering. If one of the requirements described above is not
satisfied, distributions will be paid in cash to participants rather
than used in the reinvestment plan.

     If you participate in the reinvestment plan you must agree that,
if you at any time fail to meet our suitability standards or cannot
make the other investor representations contained in our current
prospectus, the subscription agreement, or the operating agreement,
you will promptly notify us in writing.

     You should understand that affirmative action is required to
change or withdraw from the reinvestment plan. Change in or
withdrawal from participation in the reinvestment plan will be
effective only with respect to distributions made 30 days following
receipt by our managers of written notice of change or withdrawal. In
the event you transfer your units, the transfer will terminate your
participation in the reinvestment plan as of the first day of the
quarter in which the transfer is effective.

     We will not pay selling commissions, nonaccountable expenses or
organization fees for units purchased with reinvested distributions.
We will not charge or offset any reinvestment fee against any reinvested
distributions under the reinvestment plan. The cost of administering the
reinvestment plan will be considered an organization and offering
cost and the actual cost of administering the reinvestment plan may
be reimbursed to our managers in accordance with the limitations on
reimbursements for organization and offering expenses.

     Following each reinvestment, each participant in the plan will
be sent a statement showing the distributions received and the number
and price of units issued to the participant. Taxable participants
will incur tax liability for income allocated to them even though
they have elected not to receive their distributions in cash but
rather to have their distributions reinvested in the purchase of
units.

     We reserve the right to amend any aspect of the reinvestment
plan, or to terminate the reinvestment plan, with respect to any
distribution of cash flow subsequent to notice of such amendment or
termination, provided that notice is sent to all participants in the
plan at least 10 days prior to the record date for the distribution.
Our managers also reserve the right to assign the administrative
duties of the reinvestment plan to a reinvestment agent who may hold
units on behalf of participants, provide reports to participants, and
satisfy other record keeping requirements.

     Investors may also be given the opportunity to reinvest
distributions from AEI Fund 26 in interests of a program having
substantially identical investment objectives as AEI Fund 26, if
affiliates of our managers publicly offer the program interests after
the termination of the offering of units under this prospectus.

                       40


Investors would be allowed to reinvest distributions from AEI Fund 26
in a subsequent program only if each of the following conditions are
satisfied:

     the subsequent program is registered under federal and
     applicable state securities laws;

     the subsequent program has substantially identical investment
     objectives;

     reinvesting investors are afforded the revocation rights
     described above with respect to such reinvestments and the payment of
     commissions on such reinvestments; and

     each participating investor receives the prospectus, including
     any supplements, relating to such subsequent program and satisfies
     the investment qualifications, including minimum investment
     requirements, for such subsequent offering.

     Our managers are not obligated to continue the offering of units
or to offer units in any subsequent real estate programs or permit
reinvestment therein.


LIABILITIES OF INVESTORS

     You will not be liable for any of our obligations in excess of
the capital you agree to contribute by signing a subscription
agreement, plus your share of undistributed net income. If, however,
you receive a return of your capital contribution you will be liable,
for a period of one year if the capital contribution was returned,
for any obligations to creditors who extended credit, or whose claims
arose, before your capital contribution was returned, but not in
excess of the returned capital contribution with interest, necessary
to discharge the liabilities. You will not have the right to a return
of your capital contributions except in accordance with the
distribution and repurchase provisions of our operating agreement.

RIGHTS, POWER AND DUTIES OF THE MANAGERS

     Our managers will have the exclusive right to manage our
business. Our managers will be responsible for the selection,
acquisition, sale, refinancing and leasing of all our properties. The
rights, powers and duties of our managers may be delegated or
contracted to an affiliate of the managers at cost. AEI Fund
Management XXI will initially serve as our manager.

SUBSTITUTED INVESTORS; ASSIGNEES

     You will not have the right to substitute an investor in your
place unless you have represented to us that you have received
information necessary to make a decision to assign your units,
including information about the most recent repurchase price of
units, and unless the substituted investor has agreed in the
instrument of assignment to become an investor and has paid all
expenses in connection with admission as a substituted investor. An
assignee who does not become a substitute investor will only have the
right to receive the distributions from AEI Fund 26 to which the
assigning investor would have been entitled if no such assignment had
been made. The assignee will have no right to require any information
or account from us or to inspect our books.

APPOINTMENT OF MANAGERS AS ATTORNEYS-IN-FACT

     By signing the subscription agreement, you will irrevocably
constitute and appoint our managers as your attorney-in-fact, with
power to execute documents necessary to carry out the provisions of
our operating agreement.

"ROLL-UPS"

     Our operating agreement prohibits transactions in which units
are required to be exchanged for securities of another entity (as
defined in the operating agreement as a "roll-up") unless certain

                       41


rights of the investors are maintained in the resulting entity and
unless a vote of the majority of our investors is obtained. The
operating agreement defines a roll-up to include certain transactions
involving the acquisition, merger, conversion, or consolidation,
either directly or indirectly, of AEI Fund 26 and the issuance of
securities from another entity. This definition comports with
requirements under certain state securities laws but differs slightly
from definitions used by the SEC and may differ from definitions
contained in rules or legislation promulgated in the future. The
determination of whether a transaction constitutes a roll-up will, in
the first instance, be made by our managers.

     Our operating agreement provides, in material part, that we may
not participate in any roll-up that would:

     reduce the democracy rights of our investors;

     impede the ability of the equity owners of the resulting entity
     to purchase the securities of that entity;

     limit the voting rights of our investors as equity owners of the
     resulting entity;

     limit rights to access to records of the resulting entity; or
     provide, without the consent of investors, that the costs of the
     roll-up are to be borne by AEI Fund 26.

     Further, our operating agreement requires that we obtain an
appraisal by a competent independent expert of our assets, based upon
all available information and assuming an orderly liquidation of our
assets, in connection with any roll-up that we summarize for
investors. If the appraisal is included in a roll-up prospectus, it
must be filed with securities authorities and we will have liability
for misrepresentations or omissions that it contains.

     A roll-up requires the vote of holders of not less than a
majority of the units. Our operating agreement provides that an
investor who votes against the roll-up must be given the option of
accepting securities in the resulting entity or accepting either cash
for the investor's units at the pro rata appraised value of our
assets or the ability to retain the investor's interest in AEI Fund
26 on the same terms and conditions as existed previously.

                        REPORTS TO INVESTORS

     Our books and records will be maintained at our principal
offices and will be open for examination and inspection by our
investors during reasonable business hours. We will furnish a list of
names and addresses and number of units held by investors to any
investor who requests the list in writing for a proper purpose, with
costs of photocopying and postage to be borne by the requesting
investor. The assignee of an investor does not have a right to
receive any reports unless the assignee is admitted as a substitute
member in accordance with our operating agreement.

     Within 75 days after the close of each taxable year, we will
distribute both to investors and assignees of investor interests who
held the assignment interest during the relevant tax period, all
information relating to AEI Fund 26, consisting of a Schedule K-1
report, that is necessary for the preparation of their federal income
tax returns.

     Within 120 days after the end of each fiscal year, we will also
distribute to you an annual report containing a balance sheet and
statements of operations, changes in members' equity and cash flows
(which will be prepared on a GAAP basis of accounting and will be
examined and reported upon by an independent public accountant) and a
report of our activities during the period reported upon. The annual
report will describe all reimbursements to our managers and their
affiliates and all distributions to investors, including the source
of the payments. The annual report will also include our manager's
estimate of the value of a unit in the Company, a statement of the
method used to develop this estimated value, and the date of the data
used to develop the estimated value.

     Within 60 days after the end of each quarter, we will also
distribute to you a report containing a condensed balance sheet,
condensed statements of operation, and a related cash flow statement,
together with a detailed statement describing all real properties
acquired (including the geographic locale and the plan of operation,

                       42

the appraised value and purchase price and all other material
information), setting forth all fees, if any, received by our
managers or their affiliates and describing the services rendered for
these fees.

     Our managers intend to make all of the foregoing reports
available electronically, and to allow delivery to an e-mail address
or through access at one of the manager's web sites. Because
electronic delivery is expected to save considerable printing and
mailing costs, all investors who have the ability to accept
electronic delivery are urged to complete the portion of the
subscription agreement that provides written consent to this form of
delivery.

     Finally, when and if required by applicable SEC rules, we will
make available to investors, upon request, the information set forth
in SEC Form 10-QSB within 45 days after the close of each quarter and
SEC Form 10-KSB within 90 days after the close of each fiscal year.
Our managers are permitted to combine such reports so long as they
are distributed in a timely manner.

                        PLAN OF DISTRIBUTION

THE OFFERING: HOW TO INVEST

     We are offering, through AEI Securities, as the manager of a
syndicate of broker-dealers that will solicit purchase of units,
$100,000,000 of our limited liability company interests in the form
of 10,000,000 units of $10.00 each. You must purchase a minimum of
five hundred units ($5,000) to invest. The offering period will
commence on the date of this prospectus. We will not sell any units
unless we receive subscriptions for at least 150,000 units within one
year after the date of this prospectus.

     To invest, you will be required to accept and adopt the
provisions of the operating agreement attached to this prospectus as
Exhibit A and to complete and sign the subscription agreement
attached as Exhibit C. At the time you submit a subscription
agreement, you must submit a check for $10.00 for each Unit you are
purchasing. Checks should be made payable to "Fidelity Bank-AEI Fund
26 Escrow." We will sell units to you only if you represent in
writing that, at the time you sign the subscription agreement, you
meet the suitability requirements described under "Who May Invest"
above. AEI Securities has confirmed that its agreements with the
broker-dealers who solicit purchase of units will prohibit sales to
accounts over which the dealers have discretionary authority without
the prior written approval of the customer and we will not accept any
subscriptions signed by a dealer on behalf of a customer.

ESCROW: ACCEPTANCE OF SUBSCRIPTIONS

     We will deposit all funds received from investors in an escrow
account with Fidelity Bank, Edina, Minnesota until $1,500,000 has
been deposited. Purchases by our managers and their affiliates will
not be counted for purposes of meeting this minimum. Broker-dealers
who solicit purchases are required to forward your subscription and
check to us by noon of the business day after you submit it and we
are required to deposit your check in the escrow account by noon of
the second business day after we receive it. If the required
$1,500,000 has not been deposited within one year after the date of
this prospectus, all subscriptions will be canceled and all funds
will be promptly returned to investors with interest and without any
deduction. An investor may not withdraw his funds from the escrow
account. When we have received subscriptions for the minimum number
of units, our managers may remove funds from escrow and instruct the
escrow agent to pay accrued selling commissions. After this initial
release from escrow, the escrow account will convert to a convenience
clearing account for our use.

     Upon admission to AEI Fund 26, you will receive your pro rata
share of any interest earned on escrowed funds based upon the date of
deposit of your subscription payment. Escrow funds will be invested
in insured deposits with a financial institution and will earn
interest at short-term deposit rates. Following first admission, we
will admit additional investors as limited members on or before the
first business day of each month until the termination of the
offering. Only subscribers whose subscriptions have been received and
accepted at least five business days prior to each admittance date
will be admitted as limited members on such date.

                       43

     Our managers have complete discretion to reject any subscription
agreement within 30 days of its submission. Funds from a rejected
subscriber will be returned within 10 days after rejection.
Subscriptions may be rejected for an investor's failure to meet the
suitability requirements, an over-subscription of the offering, or
for other reasons determined to be in the best interest of AEI Fund
26. Our managers and their affiliates may purchase units, without
limitation, on the same terms as other investors. Any purchase by the
managers or affiliates will be for investment and not for
redistribution.

SELLING ARRANGEMENTS

     AEI Securities and other broker-dealers that are members of the
NASD as "participating dealers," have agreed to use their
"commercially reasonable efforts" to sell the units. None of these
broker-dealers are obligated to purchase units and resell them or to
sell any or all of the units. Participating dealers in the offering
will offer and sell units on the same terms and conditions as AEI
Securities.

     Except as described below, we will pay AEI Securities selling
commissions of 6.5% and a nonaccountable expense allowance of 3.5% of
the gross proceeds from the sale of units.  All of the commissions will
be repaid to participating dealers and a portion of the nonaccountable
allowance may be reallowed to some dealers.  AEI Securities may also
receive up to one-half of 1% of the gross offering proceeds for the
reimbursement of bona fide due diligence expenses of the participating
dealers, all of which will be repaid by AEI Securities to the participating
dealers.

     We will sell units directly to the dealer or customer at a price
of $9.35 per unit, in connection with the following special sales:

       the sale of our units to one or more participating dealers and
       to their respective officers and employees and some of their
       respective affiliates who request and are entitled to purchase units
       net of selling commissions;

       the sale of units to investors whose contracts for investment
       advisory and related brokerage services include a fixed or "wrap" fee
       feature, provided that the participating dealer associated with the
       investment advisor agrees to waive its commission.

     It is illegal for us to pay or award any commissions or other
compensation to any person engaged by you for investment advice as an
inducement to such advisor to advise you to purchase our units.

Although we will pay our manager an organization fee to form AEI Fund
26 and will reimburse our managers and their affiliates for the costs
they incur in connection with the offer and sale of the units, except
for commissions, nonaccountable expenses and due diligence costs
described in this section, we will not pay any other incentive fees,
wholesaling costs or other expense reimbursement or commissions for
sales efforts.

DEFERRED COMMISSION OPTION

     You may agree with the participating dealer and the dealer
manager to have selling commissions due on the purchase of your units
paid over a period of up to six years pursuant to a deferred
commission option arrangement. If you elect the deferred commission
option, you may purchase units for an initial purchase price of $9.50
per unit. Under this arrangement, you will pay $.50 per unit upon
subscription to cover the nonaccountable expenses of the dealer
manager and a portion of the participating dealer commission, rather
than the $1.00 per unit selling commission and expense allowance, and
we will deduct an amount equal to a $.10 per unit selling commission
per year for the next five years from cash distributions otherwise
payable to you. For example, to purchase 10,000 units, you would pay
$95,000 with your subscription and we would pay selling commissions
and nonaccountable expenses of $5,000 upon subscription. For each of
the five years following the subscription, we will deduct $.10 per
unit, or $1,000 total, from cash distributions otherwise payable to
you. We would pay this amount to the participating dealer on your
behalf to pay deferred commission obligations. You will be
considered, for tax purposes, to have received the commissions we pay
on your behalf as a distribution and we will report to the IRS the
income it represents even though you do not receive it.

     To elect the deferred commission option, you must complete the
subscription agreement and must also have an authorized
representative of the participating dealer initial the agreement. If
you elect the deferred commission option and either (i) elect to
participate in our unit repurchase program or (ii) request that we

                       44

transfer your units for any other reason prior to the time that the
remaining deferred selling commissions have been deducted from cash
distributions, then we will accelerate the remaining selling
commissions due under the deferred commission option. If you decide
to sell your units under our unit repurchase program, you will be
required to pay us the unpaid portion of the deferred commission
obligation prior to our purchase of your units or we will deduct the
unpaid portion from the amount we would otherwise pay you on
repurchase. If you request that we transfer your units for any other
reason, we will not effect the transfer until you first either pay us
the unpaid portion of the deferred commission obligation; or provide
us with a written commitment signed by the transferee that the
transferee will pay the unpaid portion from cash distributions
otherwise payable to the transferee during the remaining portion of
the deferred commission period. If your deferred commissions have not
been paid prior to the time we liquidate, we will deduct the unpaid
portion from any proceeds to which you are entitled at the time of
our liquidation.


INDEMNIFICATION OF DEALERS

     We will indemnify the broker-dealers that act as participating
dealers and their controlling persons, against certain liabilities,
including liabilities under the Securities Act of 1933. As of the
date of this prospectus, no broker-dealers have entered into a
Participating Dealer Agreement. We will also reimburse our managers
for certain expenses incurred by them in connection with the
supervision and monitoring of the organizational and pre-sale
activities of AEI Fund 26.

                           SALES MATERIALS

     Sales material may be used in connection with this offering only
when accompanied or preceded by the delivery of this prospectus. The
sales materials that may be disseminated to prospective investors
include a brochure, video, slide presentation and transmittal letter
prepared by our managers describing AEI Fund 26 and our proposed
operations. In certain states, all sales materials may not be
available. Except for these materials, sales materials have not been
authorized for use by our managers and should be disregarded.

     This offering is made only by means of this prospectus. Although
the information contained in the supplemental sales material does not
conflict with the information contained in this prospectus, such
sales material does not purport to be complete and should not be
considered part of this prospectus or as forming the basis of the
offering of the units.

                          LEGAL PROCEEDINGS

     Neither AEI Fund 26 nor the managers are parties to any pending
legal proceedings that are material to AEI Fund 26. Neither AEI Fund
Management XXI nor Robert P. Johnson, who is the general partner or
managing member of other investment programs, is an adverse party in
any legal proceedings with limited partners or limited members in
such other limited partnerships or limited liability companies.

                               EXPERTS

     The balance sheets of AEI Income & Growth Fund 26 LLC, as of
April 4, 2005, and AEI Fund Management XXI, Inc., as of December 31,
2004 and December 31, 2003, included in this Prospectus have been
examined by Boulay, Heutmaker, Zibell & Co., P.L.L.P., independent
public accountants, as indicated in their report with respect
thereto, and are included herein in reliance on the authority of said
firm as experts in giving such report.

     The discussions under the headings "Risk Factors-Federal Income
Tax Risks" and "Federal Income Tax Considerations" have been reviewed
by Dorsey & Whitney LLP, counsel for our manager. We have received
the opinion of Dorsey & Whitney LLP that those discussions correctly
summarize the material federal income tax considerations as of the
date of this prospectus to potential investors of the purchase,
ownership and disposition of units in AEI Fund 26.

                            LEGAL OPINION

     The legality of the units will be passed upon for AEI Fund 26 by
counsel to our managers, Dorsey & Whitney LLP.

                       45


     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To the Members
AEI Income & Growth Fund 26 LLC
St. Paul, Minnesota


     We have audited the accompanying balance sheet of AEI Income
&  Growth  Fund  26  LLC  as of April 4,  2005.   This  financial
statement is the responsibility of the Company's management.  Our
responsibility  is  to  express  an  opinion  on  this  financial
statement based on our audit.

      We conducted our audit  in accordance with the standards of
the  Public  Company Accounting Oversight Board (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  An audit  includes
examining,  on a test basis, evidence supporting the amounts  and
disclosures in the financial statements.  An audit also  includes
assessing   the   accounting  principles  used  and   significant
estimates  made by management, as well as evaluating the  overall
financial  statement presentation.   We believe  that  our  audit
provides a reasonable basis for our opinion.

     In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position  of  AEI
Income  &  Growth Fund 26 LLC as of April 4, 2005, in  conformity
with U.S. generally accepted accounting principles.


                        /s/ BOULAY, HEUTMAKER, ZIBELL & CO. P.L.L.P.
                            Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                               Certified Public Accountants

Minneapolis, Minnesota
April 7, 2005

                       46


                 AEI INCOME & GROWTH FUND 26 LLC
                          BALANCE SHEET






                             ASSETS

                                                  June 30,      April 4,
                                                    2005          2005
                                                 (Unaudited)

  Cash                                             $  1,001     $  1,000
                                                    ========     ========



                 LIABILITIES AND MEMBERS' EQUITY


MEMBERS' EQUITY:

  Managing Members' Equity                         $  1,001     $  1,000
                                                    --------     --------
       Total Liabilities and Members' Equity       $  1,001     $  1,000
                                                    ========     ========







The accompanying Notes to the Balance Sheet are an integral part
                       of this statement.

                       47

                 AEI INCOME & GROWTH FUND 26 LLC
                   NOTES TO THE BALANCE SHEET
                          APRIL 4, 2005
           Information as of June 30, 2005 is unaudited

(1) SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -

    Organization

     AEI  Income  & Growth Fund 26 LLC (the Company),  a  Limited
     Liability  Company, was formed on March 14, 2005 to  acquire
     and  lease commercial properties to operating tenants.   The
     Company's operations are managed by AEI Fund Management XXI,
     Inc.  (AFM),  the Managing Member.  Robert P.  Johnson,  the
     President  and sole director of AFM, serves as  the  Special
     Managing  Member.  AFM is a wholly owned subsidiary  of  AEI
     Capital  Corporation of which Mr. Johnson  is  the  majority
     shareholder.  The Company has elected December  31  for  its
     fiscal year end.  The Operating Agreement provides that  the
     entity is to expire in the year 2055.

     The  terms of the offering call for a subscription price  of
     $10  per LLC Unit, payable on acceptance of the offer.   The
     Company has not yet sold any Units.  Under the terms of  the
     Operating Agreement, 10,000,000 LLC Units are available  for
     subscription  which,  if fully subscribed,  will  result  in
     contributed  Limited Members' capital of $100,000,000.   The
     agreement sets forth the methods for allocation of Net  Cash
     Flow,  Net  Proceeds of Sale and profits, losses  and  other
     items.

   Unaudited Interim Information

     The balance sheet at June 30, 2005 is unaudited but has been
     prepared on the same basis as the audited balance sheet and,
     in  the  opinion  of  management, includes  all  adjustments
     necessary   for  fair  presentation,  consisting  of  normal
     recurring adjustments.  The Company did  not engage  in  any
     operations  or incur any expenses  during  the  period  from
     inception through June 30, 2005 and its only income has been
     interest   earned   on   the   Managing   Members'   capital
     contribution.  Accordingly, a Statement of Income, Statement
     of Cash Flows and Statement of  Changes  in  Members' Equity
     are  not presented.

   Accounting Estimates

     Management  uses estimates and assumptions in preparing  the
     balance   sheet   in  accordance  with  generally   accepted
     accounting  principles.   Those  estimates  and  assumptions
     affect  the  reported  amounts of  assets,  liabilities  and
     equity.  Actual results could differ from those estimates.

(2)  INCOME TAXES -

     The  income  or loss of the Company for federal  income  tax
     reporting  purposes is includable in the income tax  returns
     of  the members.  In general, no recognition has been  given
     to income taxes in the accompanying balance sheet.

     The tax return and the amount of distributable LLC income or
     loss  are subject to examination by federal and state taxing
     authorities.  If such an examination results in  changes  to
     distributable LLC income or loss, the taxable income of  the
     members would be adjusted accordingly.

(3)  FAIR VALUE OF FINANCIAL INSTRUMENTS -

     The carrying value of financial instruments approximate fair
     value.

                       48


     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




Board of Directors
AEI Fund Management XXI, Inc.
Saint Paul, Minnesota


      We  have audited the accompanying balance sheet of AEI Fund
Management  XXI,  Inc. as of December 31, 2004 and  December  31,
2003.   This  financial  statement is the responsibility  of  the
Company's  management.   Our  responsibility  is  to  express  an
opinion on this financial statement based on our audits.

      We conducted our audits in accordance with the standards of
the  Public  Company Accounting Oversight Board (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  An audit  includes
examining,  on a test basis, evidence supporting the amounts  and
disclosures in the financial statements.  An audit also  includes
assessing   the   accounting  principles  used  and   significant
estimates  made by management, as well as evaluating the  overall
financial  statement presentation.  We believe  that  our  audits
provide a reasonable basis for our opinion.

     In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position  of  AEI
Fund   Management  XXI,  Inc.  as  of  December  31,   2004   and
December  31,  2003,  in conformity with U.S. generally  accepted
accounting principles.


                           /s/BOULAY, HEUTMAKER, ZIBELL & CO. P.L.L.P.
                              Boulay, Heutmaker, Zibell & Co. P.L.L.P.
                                  Certified Public Accountants


Minneapolis, Minnesota
January 26, 2005

                       49

                  AEI FUND MANAGEMENT XXI, INC.
                          BALANCE SHEET





                             ASSETS

                                                  June 30,     December 31,
                                                    2005      2004      2003
                                                (Unaudited)
CURRENT ASSETS:
   Cash and Cash Equivalents                    $    955  $ 23,185  $ 20,463
   Partnership Distributions Receivable           23,940    26,393    23,092
   Receivable from AEI Fund Management, Inc.       7,446        55        60
                                                 --------  --------  --------
        Total Current Assets                      32,341    49,633    43,615
                                                 --------  --------  --------
NONCURRENT ASSETS:
   Real Estate Investments                        30,798    35,487    46,533
                                                 --------  --------  --------
             Total Assets                       $ 63,139  $ 85,120  $ 90,148
                                                 ========  ========  ========


                       LIABILITIES AND STOCKHOLDER'S EQUITY


NONCURRENT LIABILITIES:
   Deficit in Real Estate Investments           $ 18,268  $ 13,354  $ 12,032

STOCKHOLDER'S EQUITY:
   Common Stock, Par Value $.01 per Share,
    100,000 Shares authorized,
    1,000 Shares issued and outstanding               10        10        10
   Additional Paid-in Capital                        990       990       990
   Retained Earnings                              43,871    70,766    77,116
                                                 --------  --------  --------
    Total Stockholder's Equity                    44,871    71,766    78,116
                                                 --------  --------  --------
     Total Liabilities and Stockholder's Equity $ 63,139  $ 85,120  $ 90,148
                                                 ========  ========  ========

 The accompanying notes to Balance Sheet are an integral part of
                         this statement.

                       50

                  AEI FUND MANAGEMENT XXI, INC.
                     NOTES TO BALANCE SHEET
                   DECEMBER 31, 2004 AND 2003
         Information as of June 30, 2005 is unaudited


(1)SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -

   Organization

     AEI  Fund  Management XXI, Inc. (Company)  is  the  Managing
     General  Partner  of AEI Income & Growth  Fund  XXI  Limited
     Partnership  (Fund XXI), and AEI Income & Growth  Fund  XXII
     Limited  Partnership  (Fund  XXII).   The  Company  is   the
     Managing  Member of AEI Income & Growth Fund  23  LLC  (Fund
     23),  AEI  Income & Growth Fund 24 LLC (Fund  24),  and  AEI
     Income & Growth Fund 25 LLC  (Fund 25),  and  AEI  Income  &
     Growth Fund 26 LLC (Fund 26).  On August 31, 2003, Robert P.
     Johnson,  the  Company's   sole stockholder, contributed the
     outstanding shares of the Company to a newly formed  entity,
     AEI Capital Corporation (ACC).  The  Company operates  as  a
     wholly owned subsidiary of ACC.   Robert  P.  Johnson is the
     majority stockholder of ACC.  At December 31, 2004 and 2003,
     the Company owned 22 Limited Partnership Units of Fund XXII.
     Investors in the funds  listed above have no interest in the
     assets or operations of the Company.

   Financial Statement Presentation

     The  Company accounts for its investments under  the  equity
     method of accounting.  The Company's major source of cash is
     its  share of distributions allocated under the terms of the
     Limited Partnership or Limited Liability Company Agreements.
     The  combined assets, revenues and net income for the  above
     referenced   entities  were  $88,833,095,   $6,248,139   and
     $4,523,603   for   2004  and  $71,796,077,  $5,173,209   and
     $6,928,294  for 2003.  The Company's share of income  (loss)
     ranges from 1% to 2%.  At December 31, 2004 and December 31,
     2003,  the  Company had accumulated deficits of $13,354  and
     $12,032, respectively.  The Company would be responsible  to
     fund  a  deficiency in its capital account,  as  defined  by
     agreement, if the real estate investment terminates.

   Unaudited Interim Information

     The balance sheet as of  June  30, 2005  is  unaudited.  The
     unaudited balance sheet  has been prepared on the same basis
     as  the  audited  balance  sheets and,  in  the  opinion  of
     management,  includes  all  adjustments  necessary for  fair
     presentation, consisting of normal recurring adjustments.

     At June 30, 2005, the unaudited combined assets, revenues and
     net income for the above referenced entities were $98,307,788,
     $3,534,725, and $1,814,804.  At  June 30, 2005,  the  Company
     owned 22 Limited Partnership Units of Fund  XXII.

                       51


                  AEI FUND MANAGEMENT XXI, INC.
                     NOTES TO BALANCE SHEET
                   DECEMBER 31, 2004 AND 2003
         Information as of June 30, 2005 is unaudited


(1)SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES -(Continued)

   Accounting Estimates

     Management uses estimates and assumptions in preparing  this
     balance   sheet   in  accordance  with  generally   accepted
     accounting  principles.   Those  estimates  and  assumptions
     affect  the  reported  amounts of  assets,  liabilities  and
     stockholder's  equity.   Actual results  could  differ  from
     those estimates.

   Cash Equivalents

     The  Company  considers all highly liquid  debt  instruments
     purchased with a maturity of three months or less to be cash
     equivalents.

   Cash Concentrations of Credit Risk

     The   Partnership's  cash  is  deposited  primarily  in  one
     financial  institution and at times during the year  it  may
     exceed FDIC insurance limits.


(2)  RECEIVABLE FROM AEI FUND MANAGEMENT, INC. -

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

(3)  INCOME TAXES -

     The  Company  elected S-Corporation status.   As  a  result,
     prior  to  September 1, 2003, the income of the Company  for
     Federal and State income tax reporting purposes was included
     in the income tax return of the sole stockholder.  On August
     31,  2003,  the  Company  became a  qualified  subchapter  S
     subsidiary  of ACC.  As a result, the income of the  Company
     is  treated as belonging to the parent corporation, ACC.  In
     general,  no recognition has been given to income  taxes  in
     the accompanying financial statements.

(4)  FAIR VALUE OF FINANCIAL INSTRUMENTS -

     The carrying value of financial instruments approximate fair
     value.


                       52

                              EXHIBIT A

                         OPERATING AGREEMENT
                                 OF
                   AEI INCOME & GROWTH FUND 26 LLC


                          TABLE OF CONTENTS

     Article                                               Page

      I.    Formation of Limited Liability Company          A-2

      II.   Definitions                                     A-2

      III.  Purpose and Character of Business               A-6

      IV.   Capital                                         A-6

      V.    Allocation of Profits, Gains and
             Losses; Distributions to Members               A-9

      VI.   Rights, Powers and Duties of Managing Members   A-12

      VII.  Provisions Applicable to Limited Members        A-18

      VIII. Books of Account; Reports and Fiscal Matters    A-21

      IX.   Assignment of Limited Member's Interest         A-23

      X.    Death Withdrawal, Expulsion and Replacement
             of the Managing Members                        A-25

      XI.   Amendment of Agreement and Meetings             A-26

      XII.  Dissolution and Liquidation                     A-26

      XIII. Miscellaneous Provisions                        A-27

                       A-1

                         OPERATING AGREEMENT
                                 OF
                   AEI INCOME & GROWTH FUND 26 LLC


      THIS OPERATING AGREEMENT is entered into as of this         day
of               ,  2005  by and among AEI Fund Management XXI,  Inc.
(the  "Managing Member"), a Minnesota corporation, Robert P.  Johnson
(the "Special Managing Member"), and all other parties comprising the
Limited Members, who shall execute this agreement and whose addresses
appear at the end of this agreement.

I.   FORMATION OF THE LIMITED LIABILITY COMPANY

      The parties hereto do hereby confirm the formation of a limited
liability company (the "Company") pursuant to the provisions  of  the
Delaware Limited Liability Company Act (the "Act") by the filing of a
Certificate of Formation on March 14, 2005 and agree that the Company
shall  be governed by the terms of this agreement. The parties  agree
that  they  shall promptly file any amended certificates of formation
that  may  be  required in the appropriate office  in  the  State  of
Delaware  and in such other offices as may be required, and that  the
parties  shall  comply with the other provisions and requirements  of
the Limited Liability Company Act as in effect in Delaware, which Act
shall  govern  the rights and liabilities of the Members,  except  as
herein or otherwise expressly stated.

1.1   NAME. The business of the Company is conducted under  the  firm
name and style of:  AEI INCOME & GROWTH FUND 26 LLC.

1.2   AGENT  FOR  SERVICE. The agent for service of  process  is  The
Corporation Trust Company. The location of the agent for  service  of
process  of  the  Company shall be at The Corporation Trust  Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New  Castle
County, Delaware 19801.

1.3   PRINCIPAL PLACE OF BUSINESS /NAMES AND ADDRESSES. The  location
of  the  principal place of business, principal office and agent  for
service  of  process of the Company shall be at the  offices  of  the
Managing  Member, 1300 Wells Fargo Place, 30 East 7th  Street,  Saint
Paul, Minnesota 55101. The Company may also maintain offices at  such
other place of business as the Managing Member may from time to  time
determine.  The name and address of the Managing Member is  AEI  Fund
Management  XXI,  Inc., 1300 Wells Fargo Place, 30 East  7th  Street,
Saint  Paul,  Minnesota 55101. The name and address  of  the  Special
Managing Member is Robert P. Johnson, 1300 Wells Fargo Place, 30 East
7th  Street, Saint Paul, Minnesota 55101. The names and addresses  of
the  Limited Members are set forth on Schedule A at the end  of  this
agreement.

1.4   TERM.  The Company shall commence business on the date  hereof,
and  shall  continue  until  December  31,  2055,  unless  dissolved,
terminated  and  liquidated prior thereto  under  the  provisions  of
Article XII.

II.  DEFINITIONS

      As  used in this agreement, the following terms shall have  the
following meanings:

2.1  "Acquisition Expenses" means expenses including, but not limited
to, legal fees and expenses, travel and communication expenses, costs
of  appraisals,  non-refundable option  payments  on  properties  not
acquired,   accounting  fees  and  expenses,  title   insurance   and
miscellaneous  expenses  related  to  selection  and  acquisition  of
properties with initial, whether or not acquired.

2.2   "Acquisition Fees" means the total of all fees and  commissions
paid  by any party in connection with making or investing in mortgage
loans  or  the  purchase, development or construction of  Properties,
whether  designated  as  a  real estate commission  relating  to  the
purchase  of Properties, Selection Fee, Development Fee, Construction
Fee,  nonrecurring  management fee,  loan  fees  or  points  paid  by
borrowers  to the Managing Member if the Company invests in  mortgage
loans,  or any fee of a similar nature, however designated or however
treated  for tax or accounting purposes. Acquisition Fees  shall  not
include Development Fees and Construction Fees paid to any person  or
entity  who  is not Affiliates of the Managing Members in  connection
with the actual development and construction of a project.

                       A-2

2.3   "Adjusted  Capital Contributions" means the aggregate  original
capital contribution of a Limited Member reduced, from time to  time,
by  (i) any return of capital contributions pursuant to Section  4.5,
and  (ii)  to the extent the Company has paid a cumulative  (but  not
compounded) 6% per annum return on Adjusted Capital Contributions, by
total cash distributed from Net Proceeds of Sale with respect to  the
Units;  and  increased from time to time by the product  of  (i)  the
Adjusted  Capital Contribution of any Limited Member whose Units  are
repurchased  and  (ii) the ratio of each remaining  Limited  Member's
Units  to the total Units outstanding after such repurchase. Adjusted
Capital  Contributions shall not be reduced by distributions  of  Net
Cash Flow.

2.4    "Administrative  Expenses"  means  expenses  incurred  by  the
Managing  Members  and their Affiliates during the operation  of  the
Company directly attributable to rendering the following services  to
the  Company:  (i) administering the Company (including  agency  type
services,  member  relations and communications,  financial  and  tax
reporting,   accounting   and  payment  of   accounts,   payment   of
distributions,  payment of unit redemptions, staffing and  processing
other   investor  requests);  (ii)  property  management   (including
collecting, depositing and monitoring rental payments and  penalties,
monitoring  compliance  with leases, monitoring  the  maintenance  of
property   and  liability  insurance  and  the  payment   of   taxes,
maintenance  of  lease  insurance  (if  applicable),  monitoring  and
negotiating  other forms of tenant security and financial  condition,
ongoing  site  inspections and property reviews and reviewing  tenant
reports); (iii) property and lease workout (including enforcing lease
provisions  in  default,  filing lease  insurance  claims,  enforcing
guarantees,  collecting  letters  of  credit  or  foreclosing   other
collateral, if applicable, eviction of tenants in default, re-leasing
of properties, and monitoring tenant disputes and foreclosures); (iv)
property  financing and refinancing; and (v) Company dissolution  and
liquidation  (accounting, final payment to creditors,  administrative
filings and other costs).

2.5    "Affiliate"  means  (i)  any  person  directly  or  indirectly
controlling,  controlled  by  or under common  control  with  another
person,  (ii)  any person owning or controlling 10% or  more  of  the
outstanding  voting  securities  of  such  other  person,  (iii)  any
officer,  director or partner of such person and (iv) if  such  other
person is an officer, director or partner, any such company for which
such person acts in such capacity.

2.6   "Company"  means the limited liability company formed  by  this
agreement.

2.7   "Competitive  Real Estate Commissions"  means  real  estate  or
brokerage  commissions paid for the purchase or sale  of  a  Property
that  are reasonable, customary and competitive in light of the size,
type  and  location of such Property and which do not, in any  event,
exceed 6% of the contract price for the sale of such Property.

2.8   "Construction Fee" means a fee or other remuneration for acting
as  general  contractor  and/or  construction  manager  to  construct
improvements,  supervise and coordinate projects or to provide  Major
Repairs or Rehabilitation of Company Property.

2.9   "Cost"  means, when used with respect to services furnished  by
the  Managing  Members or their Affiliates to, or on behalf  of,  the
Company,  the  lesser  of (i) the actual expenses  incurred  by  such
Managing  Members and Affiliates in providing services  necessary  to
the prudent operation of the Company, including salaries and expenses
paid  to officers, directors, employees and consultants, depreciation
and  amortization,  office rent, travel and  communication  expenses,
employee  benefit  expenses,  supplies and  other  overhead  expenses
directly attributable to the furnishing of such services; or (ii) the
price that would be charged by unaffiliated parties rendering similar
services in the same geographic location. Overhead expenses shall  be
charged  only if directly attributable to such services and shall  be
allocated  based  upon  the amount of time personnel  actually  spend
providing  such  services, or such other method of allocation  as  is
acceptable to the Company's independent public accountant.

2.10  "Development  Fee"  means a fee  for  packaging  the  Company's
Property,  including negotiating and approving plans, and undertaking
to  assist  in obtaining zoning and necessary variances and necessary
financing  for a specific Property, either initially or  at  a  later
date.


2.11  "Front-End Fees" means fees and expenses paid by any party  for
services  rendered during the Company's organizational or acquisition
phase,  including  Organizational and Offering Expenses,  Acquisition
Fees,  Acquisition Expenses, interest on deferred fees  and  expenses
and other similar fees, however designated by the Managing Member.

                       A-3


2.12   "Investment  in  Properties"  means  the  amount  of   capital
contributions  actually  paid  or  allocated  to  the   purchase   of
Properties,  including  working capital  reserves  allocable  thereto
(except  that working capital reserves in excess of 5%  will  not  be
included)  and  other cash payments such as interest and  taxes,  but
excluding Front-End Fees.

2.13  "Limited  Members" means all parties who shall execute,  either
personally  or by an authorized attorney-in-fact, this  agreement  as
Limited  Members and comply with the conditions in Section  4.2,  and
any  and  all assignees of the Limited Members, whether or  not  such
assignees are admitted to the Company as substitute Limited  Members;
provided,  however, that an assignee of the interest of  any  Limited
Member  shall  not be considered a "Limited Member" for  purposes  of
Articles  X  and  XI hereof unless such assignee  is  admitted  as  a
substitute Limited Member as provided in Article IX.

2.14  "Limited  Liability  Company Act" means  the  Delaware  Limited
Liability Company Act, as the same may be amended.

2.15  "Limited  Liability Company Unit" or "Unit" means  the  Company
interest  and appurtenant rights, powers and privileges of a  Limited
Member  and represents the stated capital contributions with  respect
thereto, all as set forth elsewhere in this agreement.

2.16   "Major   Repairs   or  Rehabilitation"   means   the   repair,
rehabilitation  or reconstruction of a Property where  the  aggregate
costs exceed 10% of the fair market value of the Property at the time
of such services.

2.17  "Managing  Members"  means the  Managing  Member,  the  Special
Managing  Member and any substitute Managing Member  as  provided  in
Article X.

2.18  "Managing Member" means AEI Fund Management XXI, Inc., and  any
substitute as provided in Article X.

2.19 "Members" means the Managing Member, the Special Managing Member
and the Limited Members.

2.20     "Net  Value  Per  Unit" means the  aggregate  value  of  the
Company's  assets less the Company's liabilities, and less the  value
attributable to the interest of the Managing Members, divided by  the
number  of  Units  outstanding.  Such aggregate  value  shall  be  as
determined by the Managing Members, after taking into account (i) the
value  of  the Fund's properties based on the application  of  rental
capitalization  rates  for similarly situated  properties,  based  on
pending or proposed transactions relating to the properties, or based
on  such other methods as the Managing Member deems reasonable,  (ii)
the price at which Units of the Company have last been purchased, and
(ii) such other factors as the Managing Member deems relevant.

2.21   "Net  Cash  Flow"  means  Company  cash  funds  provided  from
operations,  including  lease  payments  from  builders  and  sellers
without  deduction for depreciation, but after deducting  cash  funds
used  to  pay all other expenses, debt payments, capital improvements
and  replacements  and less the amount set aside for  restoration  or
creation of reserves.

2.22  "Net Proceeds of Sale" means the excess of gross proceeds  from
any sale, refinancing (including the financing of a Property that was
initially  purchased debt-free) or other disposition  of  a  Property
over  all  costs  and expenses related to the transaction,  including
fees  payable in connection therewith, and over the payments made  or
required  to be made on any prior encumbrances against such  Property
in connection with such transaction.


2.23  "Organization  Fee"  means a fee to  the  Managing  Members  in
consideration  of its organization of the Company equal  to  1.5%  of
capital  contributions, but only to the extent that Organization  and
Offering  Expenses, including such Organizational Fee, do not  exceed
15% of capital contributions.

2.24  "Organization and  Offering  Expenses"  means  the Organization
Fee  and  all  other  expenses  incurred  in  connection  with and in
preparing the Company for registration  and subsequently offering and
distributing it  to  the public,  including  any  sales  commissions,
nonaccountable  expense allowances or reimbursement of bona fide  due

                       A-4

diligence expenses  paid  to  broker-dealers  in  connection with the
distribution of the Company and all advertising expenses.

2.25  "Permitted  Transfer" means, with respect to  the  transfer  of
Units  in  any fiscal year of the Company (i) transfers in which  the
basis  of  the Unit in the hands of the transferee is determined,  in
whole  or  in  part, by reference to its basis in the  hands  of  the
transferor,  or  is  determined under Section  732  of  the  Internal
Revenue  Code  of  1986, as amended (the "Code"), (ii)  transfers  of
Units  upon the death of a Limited Member, (iii) transfers  of  Units
between members of a family (as defined in Section 267(c)(4)  of  the
Code),  (iv)  transfers of Units at original issuance and  sale,  (v)
transfers  of Units pursuant to distribution under a Qualified  Plan,
and  (vi) block transfers of Units by a single Member in one or  more
transactions  during any thirty calendar day period  representing  in
the  aggregate more than five percent (5%) of the total  interest  of
all Members in Company capital and profits.

2.26 "Properties" or "Property" means real properties or any interest
therein  acquired  directly or indirectly  by  the  Company  and  all
improvements  thereon  and  all  repairs,  replacements  or  renewals
thereof, together with all personal property acquired by the  Company
that  from  time to time is located thereon or specifically  used  in
connection therewith.

2.27  "Prospectus" means that certain prospectus of the Company dated
        , 2005.

2.28  "Qualified Matching Service" means a listing system  operation,
provided either through the Managing Members or through any unrelated
third  party  (including any dealer in the Units), in  which  Limited
Members  contact the operator to list Units they desire  to  transfer
and  through which the operator attempts to match the listing Limited
Member  with  a customer desiring to buy Units without (i)  regularly
quoting  prices  at which the operator stands ready to  buy  or  sell
interests, (ii) making such quotes available to the public, or  (iii)
buying or selling interests for its own account.

2.29  "Qualified Matching Service Transfer" means a transfer of Units
through  a Qualified Matching Service in which (i) at least a fifteen
(15) calendar day delay occurs between the day (the "Contact Date") a
Limited   Member  provides  written  confirmation  to  the  Qualified
Matching Service that his or her Units are available for sale and the
earlier  of  (A) the day information is made available  to  potential
buyers  that  such  Units are available for  sale,  or  (B)  the  day
information is made available to the selling Limited Member regarding
the existence of outstanding bids to purchase Units, (ii) the closing
of  the  transfer does not occur until at least forty five (45)  days
after  the Contact Date, (iii) the Limited Member's offer to sell  is
removed  from the Qualified Matching Service within one  hundred  and
twenty  (120)  days of the Contact Date, and (iv) no  Units  of  such
Limited  Member  are  entered for listing by the  Qualified  Matching
Service for at least sixty (60) days after the removal of the Limited
Member's  information from such Qualified Matching Service; provided,
however,  that  no  transfer  shall be a Qualified  Matching  Service
Transfer  if, after giving effect to such transfer, the aggregate  of
(a)  Qualified Matching Service Transfers, (b) transfers pursuant  to
the  repurchase provisions contained in section 7.7 of this agreement
of  Limited  Member interests and (c) all other transfers of  Limited
Member  interests except Permitted Transfers since the  beginning  of
the  fiscal  year  in which such transfer is made  would  exceed  ten
percent (10%) of the Company interests outstanding.

2.30  "Qualified  Plans" means Individual Retirement Accounts,  Keogh
Plans  and  pension/profit-sharing plans  that  are  qualified  under
Section 401 of the Internal Revenue Code.


2.31 "Roll-Up" means a transaction involving the acquisition, merger,
conversion, or consolidation, either directly or indirectly,  of  the
Company and the issuance of securities of a Roll-Up Entity; provided,
however, that a Roll-Up shall not include a transaction involving the
conversion  to  corporate,  trust or association  form  of  only  the
Company  if, as a consequence of such transaction, there will  be  no
significant adverse change in any of the following:

     (i)   voting rights of Limited Members;

     (ii)  the term of existence of the surviving entity beyond that
           of the Company;

     (iii) compensation to the Managing Members or their Affiliates;

                       A-5

     (iv)  the investment objectives of the Company or the surviving
           entity.

2.32  "Roll-Up Entity" means a company, real estate investment trust,
corporation,  trust or other entity that would be  created  or  would
survive   after   successful  completion  of   a   proposed   Roll-Up
Transaction.

2.33  "Special  Managing Member" means Robert  P.  Johnson,  and  any
substitute as provided in Article X.

2.34 "Sponsor" means any person, company, corporation, association or
other  entity  which  is  directly  or  indirectly  instrumental   in
organizing,  wholly or in part, the Company or any  person,  company,
corporation,  association  or  other  entity  which  will  manage  or
participate  in the management of the Company, and any  Affiliate  of
such  person, company, corporation, association or other entity,  but
does not include a person, company, corporation, association or other
entity  whose  only  relation with the  Company  is  as  that  of  an
independent  property manager, whose only compensation  is  as  such.
"Sponsor" does not include wholly independent third parties  such  as
attorneys,  accountants, and underwriters whose only compensation  is
for professional services rendered in connection with the offering of
Company  interests.  A person, company, corporation,  association  or
other entity may also be a Sponsor of the Company by: (i) taking  the
initiative,  directly or indirectly, in founding  or  organizing  the
business or enterprise of the Company, either alone or in conjunction
with one or more other persons, companies, corporations, associations
or  other  entities; (ii) receiving a material participation  in  the
Company in connection with the founding or organizing of the business
of  the  Company, in consideration of services or property,  or  both
services   and  property;  (iii)  having  a  substantial  number   of
relationships   and  contacts  with  the  Company;  (iv)   possessing
significant rights to control Company Properties; (v) receiving  fees
for  providing services to the Company which are paid on a basis that
is not customary in the industry; (vi) providing goods or services to
the  Company on a basis which was not negotiated at arm's length with
the Company.

III. PURPOSE AND CHARACTER OF THE BUSINESS

      The  purpose and character of the business of the Company shall
be  to  acquire  an interest in the Properties upon  such  terms  and
conditions as the Managing Member, in its absolute discretion,  shall
determine,  including,  without  limitation,  taking  title  to   the
Properties;  to  own, lease, operate and manage  the  Properties  for
income-producing  purposes;  to  furnish  services   and   goods   in
connection  with the operation and management of the  Properties;  to
enter  into agreements pertaining to the operation and management  of
the Properties; to borrow funds for such purposes and to mortgage  or
otherwise  encumber any or all of the Company's assets or  Properties
to  secure  such  borrowings; to sell or  otherwise  dispose  of  the
Properties and the assets of the Company; and to undertake and  carry
on  all  activities  necessary or advisable in  connection  with  the
acquisition, ownership, leasing, operation, management  and  sale  of
the Properties.

IV.  CAPITAL

4.1   MANAGING MEMBERS. The Managing Member and the Special  Managing
Member  shall  be  obligated  to make capital  contributions  to  the
Company,  to the extent not previously made, in the amounts  of  $600
and  $400,  respectively. The Managing Members shall not be obligated
to make any other contributions to the capital of the Company, except
that,  in  the event that the Managing Members have negative balances
in  their  capital accounts after dissolution and winding up  of,  or
withdrawal from, the Company, the Managing Members will contribute to
the Company an amount equal to the lesser of (a) the deficit balances
in  their  capital  accounts  or  (b)  1.01%  of  the  total  capital
contributions  of  the  Limited Members' over the  amount  previously
contributed by the Managing Members hereunder.

4.2  LIMITED MEMBER CAPITAL CONTRIBUTIONS.

          (a)    INITIAL  CONTRIBUTION.  There  shall  initially   be
   available  for  subscription  by prospective  Limited  Members  an
   aggregate  of  10,000,000 Limited Liability Company Units.  Except
   to  the  extent that a limited member may be credited for  reduced
   commissions  in  accordance with Section 6.11, the purchase  price
   of  each Unit shall be $10.00. Except as provided in section 4.10,
   each  subscriber  must subscribe for a minimum  purchase  of  five
   hundred  Units, and subscribers may purchase any number  of  Units
   above such minimum.

                       A-6

         (b)   REQUIREMENTS  FOR  LIMITED  MEMBER  STATUS.  Upon  the
   initial  closing  of  the sale of Units, the  purchasers  will  be
   admitted  as  Limited Members not later than  15  days  after  the
   release  from  impound  of the purchasers' funds.  Thereafter,  an
   investor will be admitted to the Company not later than the  first
   day  of each month provided that his or her subscription for Units
   has  been received at least five business days prior to such date.
   All  subscriptions for Units shall be accepted or rejected by  the
   Company  within 30 days of their receipt; if rejected,  all  funds
   shall be returned to the subscriber within ten business days.  The
   Managing  Member  shall  promptly  send  each  Limited  Member   a
   confirmation of such Limited Member's purchase and admission as  a
   Limited  Member. The Members shall not be obligated  to  make  any
   additional contributions to the capital of the Company.

4.3  CAPITAL ACCOUNTS. A separate capital account shall be maintained
by  the  Company  for each Member. It is intended  that  the  capital
account  of  each  Member will be maintained in accordance  with  the
capital accounting rules of Treas. Reg. Section 1.704-1(b)(2)(iv). In
general this will mean that the capital account of each Member  shall
be initially credited with the amount of his or her cash contribution
to  the  capital of the Company. The capital account of  each  Member
shall   further   be  credited  by  the  amount  of  any   additional
contributions to the capital of the Company made by such Member  from
time   to  time,  shall  be  debited  by  the  amount  of  any   cash
distributions  made  by  the Company to  such  Member  and  shall  be
credited  with  the amount of income and gains and debited  with  the
amount  of  losses of the Company allocated to such  Member.  In  all
instances the capital accounting rules in Treas. Reg. Section  1.704-
1(b)(2)(iv)  will  determine the proper debits  or  credits  to  each
Member's  capital account. The Managing Member may,  at  its  option,
increase or decrease the capital accounts of the Members to reflect a
revaluation of Company Property on the Company's books at  the  times
when,  pursuant  to  Treas.  Reg.  Section  1.704-1(b)(2)(iv),   such
adjustments  may  occur. The adjustments, if made, will  be  made  in
accordance with such Regulation, including allocating taxable  items,
as  computed for book purposes, to the capital accounts as prescribed
in  such Regulation. In the case of the transfer of all or a part  of
an  interest  in  the Company, the capital account of the  transferor
Member  attributable to the transferred interest will carry  over  to
the  transferee  Member. In the case of termination  of  the  Company
pursuant to Section 708 of the Code, the rules of Treas. Reg. Section
1.704-1(b)(2)(iv)  shall govern adjustments to the capital  accounts.
If  there  are  any adjustments to Company property as  a  result  of
Sections 732, 734, or 743, the capital accounts of the Members  shall
be  adjusted as provided in Treas. Reg. Section 1.701-1(b)(2)(iv)(m).
Except  as  provided in Section 4.1 of this agreement, in  the  event
that  any  Member  has  a  negative  capital  account  balance  after
dissolution  and winding up of the Company, such Member will  not  be
obligated to contribute capital in the amount of such deficit.

4.4   NO  RIGHT TO RETURN OF CONTRIBUTION. The Limited Members  shall
have   no  right  to  withdraw  or  to  receive  a  return  of  their
contributions  to the capital of the Company, as reflected  in  their
respective   capital  accounts  from  time  to  time,   except   upon
presentment  of  Units in accordance with Section  7.7  or  upon  the
dissolution and liquidation of the Company pursuant to Article XII.


4.5   RETURN OF UNUSED NET OFFERING PROCEEDS. In the event  that  any
portion of the Limited Members' capital contributions is not invested
or  committed for investment in real property before the later of two
years  after  the date of the Prospectus or twelve months  after  the
date  of  the  offer and sale of Units pursuant to the Prospectus  is
terminated (except for amounts utilized to pay operating expenses  of
the  Company and to establish reasonable working capital reserves  as
determined  by  the  Managing Member), such portion  of  the  capital
contributions  shall be distributed, without interest  but  with  any
Front-End  Fees,  including without limitation commissions  or  other
Organization and Offering Expenses, paid thereon,  by  the Company to
the Limited Members as a return  of  capital.  All  of  such  capital
contributions  will be available for the general use of  the  Company
during  such  period and may be expended in operating the  Properties
that have been acquired. For the purpose of the foregoing, funds will
be  deemed  to  have been committed to investment, and  will  not  be
returned  to  the  Limited Members to the extent written  contractual
agreements  have  been  executed  prior  to  the  expiration  of  the
preceding  period,  regardless  of whether  any  such  investment  is
ultimately consummated pursuant to the written contractual agreement.
To  the  extent  any  funds  have been reserved  to  make  contingent
payments  in  connection  with any Property  pursuant  to  a  written
contractual agreement in connection with such Property or pursuant to
a  reasonable  decision  of  the  Managing  Members  that  additional
reserves are necessary in connection with any Property, regardless of
whether any such payment is ultimately made, subscription funds  will
not be returned to the Limited Members.

                       A-7

4.6   LOANS TO COMPANY; NO INTEREST ON CAPITAL. The Members may  make
loans to the Company from time to time, as authorized by the Managing
Member,  in  excess  of their contributions to  the  capital  of  the
Company, and any such loans shall not be treated as a contribution to
the  capital of the Company for any purpose hereunder, nor shall  any
such loans entitle such Member to any increase in his or her share of
the  profits  and losses and cash distributions of the  Company,  nor
shall  any  such loans constitute a lien against the Properties.  The
amount  of  any such loans with interest thereon at a rate determined
by the Managing Member, in its absolute discretion, but not to exceed
the  rate  that  otherwise would be charged by  unaffiliated  lending
institutions on comparable loans for the same purpose,  shall  be  an
obligation of the Company to such Member. No interest shall  be  paid
by  the Company on the contributions to the capital of the Company by
the Members.

4.7  PURCHASE OF LIMITED LIABILITY COMPANY UNITS BY MANAGING MEMBERS.
The  Managing  Members  and their Affiliates may  subscribe  for  and
acquire  Units  for  their own account; provided, however,  that  any
Units  acquired by the Managing Members or their Affiliates  will  be
acquired  for  investment  and not with a view  to  the  distribution
thereof  and that the aggregate amount of Units so purchased  by  the
Managing  Members  will not exceed five percent  (5%)  of  the  Units
offered.  With respect to such Units, the Managing Members and  their
Affiliates  shall  have all the rights afforded  to  Limited  Members
under  this  agreement, except as may be expressly provided  in  this
agreement.

4.8   NONRECOURSE LOANS. A creditor who makes a nonrecourse  loan  to
the  Company  will not have or acquire, at any time as  a  result  of
making  the  loan, any direct or indirect interest  in  the  profits,
capital or property of the Company other than as a secured creditor.

4.9   WORKING CAPITAL RESERVE. The Managing Members shall  use  their
commercially reasonable efforts to maintain a working capital reserve
of  one-half  percent  (1/2%)  of  the  aggregate  Adjusted   Capital
Contributions and to restore such reserve if depleted.

4.10 DISTRIBUTION REINVESTMENT PLAN.

         (a)  "DURING THE OFFERING PERIOD, a Limited Member may elect
   to participate in a program for  the  reinvestment  of  his or her
   distributions  of  Net Cash Flow (the  "Distribution  Reinvestment
   Plan")  and  have  his  or  her  distributions  of  Net  Cash Flow
   from  operations  reinvested  in Units  of  the  Company.  Limited
   Members  participating  in  the Distribution Reinvestment Plan may
   purchase fractional Units and there  shall  be no minimum purchase
   amount with respect  to  such  participants.  Each  Limited Member
   electing to participate  in  the  Distribution  Reinvestment  Plan
   shall receive, at the time of each distribution of Net  Cash Flow,
   a notice advising such Limited Member of the  number of additional
   Units purchased with such distribution  and  advising such Limited
   Member  of  his  or  her ability  to  change  his  or her election
   to  participate  in  the Distribution Reinvestment Plan.

         (b)   If  a  Limited Member withdraws from the  Distribution
   Reinvestment  Plan, such withdrawal shall be effective  only  with
   respect  to distributions made more than 30 days following receipt
   by  the Company of written notice of such withdrawal. In the event
   of  a  transfer by a Limited Member of Units, such transfer  shall
   terminate  the Limited Member's participation in the  plan  as  of
   the first day of the quarter in which the transfer is effective.

         (c)  Distributions may be reinvested only if (i) the sale of
   Units  continues  to  be registered or qualified  for  sale  under
   federal   and   applicable  state  securities  laws;   (ii)   each
   continuing Participant has received a current prospectus  relating
   to  the  Company,  including any supplements  thereto;  and  (iii)
   there  has  been  no  distribution of  Net  Proceeds  of  Sale  or
   Refinancing.  If  (A)  any  of the foregoing  conditions  are  not
   satisfied  at  the time of any distribution, or (B)  no  interests
   are  available to be purchased, such distributions shall  be  paid
   in cash.

         (d)   Each  Limited  Member electing to participate  in  the
   Distribution  Reinvestment Plan hereby  agrees  that  his  or  her
   investment in this Company constitute his or her agreement  to  be
   a  Limited Member of the Company and to be bound by the terms  and
   conditions of this agreement and, if at any time he or  she  fails
   to  meet applicable investor suitability guidelines or cannot make
   the  other investor representations required or set forth  in  the
   then   current   Company  agreement  prospectus  or   subscription
   agreement, he or she will promptly notify the Managing Members  in
   writing.

                       A-8

         (e)   The Company will not pay any commissions in connection
   with  any  reinvestment pursuant to the plan to any  broker-dealer
   designated by the Participant in the plan. No fees shall  be  paid
   to  the  Company or the Managing Members at the time of  any  such
   reinvestment,  but  the Managing Members of  the  Company  may  be
   reimbursed  for the Cost incurred in making such reinvestment,  in
   accordance with the provisions of this agreement.

         (f)   The  Managing Members may, at their option,  elect  to
   terminate  the Distribution Reinvestment Plan at any time  without
   notice to Limited Members.

V.   ALLOCATION OF PROFITS, GAINS AND LOSSES; DISTRIBUTIONS TO
     MEMBERS

      The Members agree that the income, profits, gains and losses of
the  Company  shall be allocated and that cash distributions  of  the
Company shall be made as follows:

5.1   ALLOCATION OF INCOME, PROFITS, GAINS AND LOSSES. For income tax
purposes, income, profits, gains and losses of the Company  for  each
fiscal  year,  other than any gain or loss realized  upon  the  sale,
exchange or other disposition of any Property, using such methods  of
accounting  for  depreciation and other items as the Managing  Member
determines to use for federal income tax purposes, shall be allocated
as  of  the end of each fiscal year to each Member based upon his  or
her  varying  interest in the Company during such  fiscal  year.  The
Company shall determine, in the discretion of the Managing Member and
as  recommended by the Company auditors, whether to prorate items  of
income and deduction according to the portion of the year for which a
Member  was a member of the Company or whether to close the books  on
an  interim basis and divide such fiscal year into segments.  Subject
to  Section 5.6, for income tax purposes, income, profits, gains  and
losses,  other than any gain or loss realized upon the sale, exchange
or other disposition of any Property, shall be allocated as follows:

      (a)  Net loss shall be allocated 99% to the Limited Members,
   .6%  to  the  Managing  Member and .4%  to  the  Special  Managing
   Member; and

      (b)   Net income, profits and gains shall be allocated 97.0%
   to  the  Limited Members, 1.8% to the Managing Member and 1.2%  to
   the Special Managing Member.

5.2   DISTRIBUTIONS OF NET CASH FLOW. Net Cash Flow from  operations,
if  any, with respect to a fiscal year will be distributed 97% to the
Limited   Members  and  3%  to  the  Managing  Members.  Any  amounts
distributed  to the Limited Members in accordance with  this  Section
5.2  shall be allocated among the Limited Members pro rata based upon
the  number  of Units held by each Limited Member and the  number  of
days such Units were held during such fiscal year.

5.3   ALLOCATION  OF  GAIN  OR  LOSS UPON  SALE,  EXCHANGE  OR  OTHER
      DISPOSITION OF A PROPERTY.

         (a)   Subject  to Section 5.6, for income tax purposes,  the
   gain realized upon the sale, exchange or other disposition of  any
   Property shall be allocated as follows:

            (i)   First, to and among the Members in an amount  equal
      to  the  negative balances in their respective capital accounts
      (pro  rata  based upon the respective amounts of such  negative
      balances).

            (ii)  Next,  99% to the Limited Members  and  1%  to  the
      Managing  Members  until the balance in each  Limited  Member's
      capital  account  equals  the  sum  of  such  Limited  Member's
      Adjusted  Capital Contribution plus an amount equal to  a  6.5%
      per  annum  return  on such Limited Member's  Adjusted  Capital
      Contribution, cumulative but not compounded, to the extent  not
      previously  distributed  pursuant to Section  5.2  and  Section
      5.4(a).

            (iii)     The balance of any remaining gain will then  be
      allocated  90% to the Limited Members and 10% to  the  Managing
      Members.

         (b)   Subject to Section 5.6, any loss on the sale, exchange
   or  other disposition of any Property will be allocated 99% to the
   Limited Members and 1% to the Managing Members.

                       A-9

5.4  DISTRIBUTION OF NET PROCEEDS OF SALE. Upon refinancing, sale  or
other disposition of any of the Properties, Net Proceeds of Sale  may
be  reinvested  in  additional properties;  provided,  however,  that
sufficient  cash is distributed to the Limited Members to  pay  state
and  federal income taxes (assuming Limited Members are taxable at  a
marginal  rate of 7% above the federal capital gains rate  applicable
to  individuals) created as a result of such transaction. Except  for
distributions upon liquidation of the Company (which are governed  by
Section  12.3 of this agreement), Net Proceeds of Sale that  are  not
reinvested in additional properties will be distributed as follows:

         (a)   First,  99%  to  the Limited Members  and  1%  to  the
   Managing  Members  until  the Limited  Members  have  received  an
   amount  from  Net  Proceeds of Sale equal to the  sum  of  (i)  an
   amount  equal to a 6.5% per annum return on their Adjusted Capital
   Contributions, cumulative but not compounded, to the  extent  such
   6.5%  return has not been previously distributed to them  pursuant
   to  Section 5.2 and this Section 5.4(a), plus (ii) their  Adjusted
   Capital Contributions.

         (b)   Any remaining balance will be distributed 90%  to  the
   Limited Members and 10% to the Managing Members.

In  no  event will the Managing Members receive more than 10% of  Net
Proceeds of Sale.

5.5   CUMULATIVE RETURN. The Company shall pay a cumulative, but  not
compounded,  6%  per  annum return on Adjusted Capital  Contributions
before  applying  Net  Proceeds of Sale to a  reduction  of  Adjusted
Capital Contributions. The cumulative (but not compounded) return  on
Adjusted  Capital  Contributions with  respect  to  each  Unit  shall
commence on the first day of the calendar quarter following the  date
upon which such Unit is initially held by a Limited Member.

5.6   REGULATORY  ALLOCATIONS. The following  Regulatory  Allocations
shall be made in the following order:

         (a)   MINIMUM GAIN CHARGEBACK. Except as otherwise  provided
   in    Section    1.704-2(f)    of   the   Treasury    Regulations,
   notwithstanding   any   other  provision   of   these   Regulatory
   Allocations,  if there is a net decrease in Company  minimum  gain
   during  any  Company fiscal year, each Member shall  be  specially
   allocated items of Company income and gain for such year (and,  if
   necessary,  subsequent years) in an amount equal to that  Member's
   share  of  the  net decrease in Company minimum gain  (within  the
   meaning    of   Treas.   Reg.    1.704-2(b)(2)   and   1.704-2(d))
   determined   in   accordance   with   Treas.   Reg.    1.704-2(g).
   Allocations  pursuant to the previous sentence shall  be  made  in
   proportion  to the respective amounts required to be allocated  to
   each  Member pursuant thereto. The items to be so allocated  shall
   be  determined  in accordance with Treas. Reg.  1.704-2(f)(6)  and
   1.704-2(j)(2). This paragraph (a) is intended to comply  with  the
   minimum  gain  chargeback requirement in Treas.  Reg.   1.704-2(f)
   and shall be interpreted consistently therewith.

         (b)   MEMBER  MINIMUM GAIN CHARGEBACK. Except  as  otherwise
   provided  in  Treas.  Reg.   1.704-2(i)(4),  notwithstanding   any
   other  provision of these Regulatory Allocations, if  there  is  a
   net  decrease in Member nonrecourse debt minimum gain, as  defined
   in  Treas.  Reg.  1.704-2(i)(2) and determined pursuant to  Treas.
   Reg.   1.704-2(i)(3), attributable to a Member  nonrecourse  debt,
   as  defined  in  Treas. Reg.  1.704-2(b)(4),  during  any  Company
   fiscal   year,  each  Member  who  has  a  share  of  the   Member
   nonrecourse   debt  minimum  gain  attributable  to  such   Member
   nonrecourse  debt,  determined  in  accordance  with  Treas.  Reg.
   1.704-2(i)(5),  shall  be  specially allocated  items  of  Company
   income  and  gain  for  such  year (and if  necessary,  subsequent
   years)  in  an  amount equal to such Member's  share  of  the  net
   decrease  in Member nonrecourse debt minimum gain attributable  to
   such  Member  nonrecourse  debt,  determined  in  accordance  with
   Treas.  Reg.  1.704-2(i)(4). Allocations pursuant to the  previous
   sentence  shall  be  made in proportion to the respective  amounts
   required  to  be  allocated to each Member pursuant  thereto.  The
   items  to  be so allocated shall be determined in accordance  with
   Treas.   Regulations   1.704-2(i)(4)   and   1.704-2(j)(2).   This
   paragraph  (b)  is  intended  to  comply  with  the  minimum  gain
   chargeback  requirement  in Treas. Reg.  1.704-2(i)(4)  and  shall
   be interpreted consistently therewith.

         (c)   QUALIFIED  INCOME  OFFSET. If  a  Member  unexpectedly
   receives  an  adjustment, allocation or distribution described  in
   Treas.  Reg.   s 1.704-1(b)(2)(ii)(d)(4), (5)  or  (6),  and  such

                       A-10

   unexpected  adjustment,  allocation  or  distribution  puts   such
   Member's capital account into a deficit balance or increases  such
   deficit balance determined after such account is credited  by  any
   amounts  which the Member is obligated to restore or is deemed  to
   be  obligated to restore pursuant to the penultimate  sentence  of
   Treas.  Reg.  1.704-2(g)(1) and 1.704-2(i)(5) and debited  by  the
   items  described  in  Treas.  Reg.   1.704-1(b)(2)(ii)(d)(4),  (5)
   and  (6)  and for all other allocations tentatively made  pursuant
   to  these Regulatory Allocations as if this paragraph (c) were not
   in  this  agreement,  such  Member shall  be  allocated  items  of
   Company  income  and  gain in an amount and manner  sufficient  to
   eliminate such deficit or increase as quickly as possible.  It  is
   intended  that this paragraph (c) shall meet the requirement  that
   this  agreement contain a "qualified income offset" as defined  in
   Treas.  Reg.   1.704-1(b)(2)(ii)(d)  and  this  Section  shall  be
   interpreted and applied consistently therewith.

         (d)  GROSS INCOME ALLOCATION. In the event any Member has  a
   deficit capital account at the end of any fiscal year which is  in
   excess  of  the sum of (i) the amount such Member is obligated  to
   restore pursuant to any provision of this agreement, and (ii)  the
   amount  such Member is deemed to be obligated to restore  pursuant
   to  the  penultimate sentences of Treas. Reg.   1.704-2(g)(1)  and
   1.704-2(i)(5),  each  such  Member shall  be  specially  allocated
   items  of Company income and gain in the amount of such excess  as
   quickly as possible, provided that an allocation pursuant to  this
   paragraph  (d) shall be made only if and to the extent  that  such
   Member would have a deficit capital account in excess of such  sum
   after  all  other  allocations provided for  in  these  Regulatory
   Allocations have been made as if paragraph (c) and this  paragraph
   (d) were not in the Agreement.

         (e)   NONRECOURSE DEDUCTIONS. Nonrecourse deductions, within
   the  meaning  of Treas. Reg.  1.704-2(b)(1), for any  fiscal  year
   or  other  period shall be specially allocated to the  Members  in
   proportion to their Units.

         (f)   MEMBER  NONRECOURSE DEDUCTIONS. Any Member nonrecourse
   deductions,  within  the  meaning of  Treas.  Reg.   1.704-2(i)(1)
   and  1.704-2(i)(2), for any fiscal year or other period  shall  be
   specially allocated to the Member who bears the economic  risk  of
   loss  with  respect to the Member nonrecourse debt to  which  such
   Member nonrecourse deductions are attributable in accordance  with
   Treas. Regulations Section 1.704-2(i).

         (g)  SECTION 754 ADJUSTMENT. To the extent an adjustment  to
   the  adjusted  tax  basis of any Company asset  pursuant  to  Code
   Sections  732,  734(b) or 743(b) is required, pursuant  to  Treas.
   Reg.   1.704-1(b)(2)(iv)(m)(2) or (4), to be  taken  into  account
   in  determining capital accounts, the amount of such adjustment to
   the  capital accounts shall be treated as an item of gain (if  the
   adjustment  increases  the basis of the asset)  or  loss  (if  the
   adjustment  decreases such basis) and such gain or loss  shall  be
   specially  allocated  to the Members in a manner  consistent  with
   the  manner  in  which their capital accounts are required  to  be
   adjusted pursuant to such Sections of the Treasury Regulations.

         (h)  Limitation on Loss Allocation. Notwithstanding anything
in Sections 5.1 above, losses allocated pursuant to Section 5.1 shall
not  exceed  the  maximum amount of losses that can be  so  allocated
without  causing a Member to have an adjusted capital account deficit
at  the end of any fiscal year. In the event one of the Members would
have  an  adjusted  capital account deficit as a  consequence  of  an
allocation  of  losses pursuant to Section 5.1,  the  limitation  set
forth  herein shall be applied on a Member by Member basis so  as  to
allocate the maximum permissible losses to each Member under  Section
1.704-1(b)(2)(ii)(d) of the Regulations. All losses in excess of  the
foregoing  limitation shall be allocated to the Members in proportion
to their Units.

      The  Regulatory Allocations are intended to comply with certain
requirements  of the Treasury Regulations. It is the  intent  of  the
Members that to the extent possible, all Regulatory Allocations shall
be  offset  either with other Regulatory Allocations or with  special
allocations  of  other  items  of  Company  income,  gain,  loss,  or
deduction pursuant to this paragraph. Therefore, notwithstanding  any
other  provision  of  these Regulatory Allocations  (other  than  the
Regulatory  Allocations),  the  Managing  Member  shall   make   such
offsetting  special  allocations of Company income,  gain,  loss,  or
deduction in whatever manner it determines appropriate so that, after
such  offsetting allocations are made, each Member's capital  account
balance  is,  to  the extent possible, equal to the  capital  account
balance such Member would have had if the Regulatory Allocations were
not  part  of  the  Agreement and all Company  items  were  allocated

                       A-11

pursuant  to  Section  12.1  and  Section  12.2.  In  exercising  its
discretion under this paragraph, the Managing Member shall take  into
account  future Regulatory Allocations under Sections paragraphs  (a)
and  (b)  that,  although not yet made, are likely  to  offset  other
Regulatory Allocations previously made under paragraphs (e) and (f).

5.7    ALLOCATION   AMONG  MANAGING  MEMBERS.  Any   allocations   or
distributions to the Managing Members shall be made in the  following
ratio:   60%  to the Managing Member and 40% to the Special  Managing
Member.

VI.  RIGHTS, POWERS AND DUTIES OF MANAGING MEMBERS

      The Members agree that the Managing Members, acting through the
Managing  Member, shall have the following rights, powers and,  where
provided,  duties in connection with the conduct of the  business  of
the Company.

     The Managing Member shall manage the affairs of the Company in a
prudent  and business-like fashion and shall use its best efforts  to
carry  out the purposes and character of the business of the Company.
The  Managing  Member  shall devote such of  its  time  as  it  deems
necessary  to the management of the business of the Company  and  may
enter  into agreements with an Affiliate to provide services for  the
Company, provided that such services are furnished at Cost.

6.1   APPOINTMENT  OF  MANAGING MEMBER. Subject  to  the  limitations
herein,  and  to the express rights afforded Limited Members  herein,
including,  without limitation, the rights set forth in Articles  VII
and  XI  herein, the Special Managing Member and the Limited  Members
delegate to the Managing Member the sole and exclusive authority  for
all  aspects of the conduct, operation and management of the business
of  the  Company, including making any decision regarding  the  sale,
exchange,  lease  or  other disposition of the Properties;  provided,
however,  that  the Managing Member shall be required to  obtain  the
prior  consent  of  a majority of the Limited Members,  by  interest,
excluding any Units held by the Managing Members, (i) to the sale  of
all  or substantially all of the assets of the Company or (ii) to any
material  change  to the investment objectives and  policies  of  the
Company  as  described in the Prospectus. In the event  the  Managing
Member  proposes  to  cause the Company to enter into  a  transaction
requiring  the consent of the Special Managing Member,  the  Managing
Member  shall  forthwith notify the Special Managing  Member  of  its
intentions  in  writing.  The  Special  Managing  Member   shall   be
considered to have consented to such proposal if he fails  to  notify
the  Managing Member of his objection thereto within 20 days  of  the
date of notice of such proposal, such notification to include a brief
statement of each reason for the Special Managing Member's opposition
to  such  proposal.  With the exceptions stated above,  the  Managing
Member  shall  have  the exclusive authority to  make  all  decisions
affecting  the Company and to exercise all rights and powers  granted
to the Managing Members.

6.2  REIMBURSEMENT OF EXPENSES.

         (a)  Subject to the limitations set forth in Section 6.2(b),
   the  Company  shall  reimburse  the  Managing  Members  and  their
   affiliates at their Cost:  (i) for any expenditures of  their  own
   funds  for  purposes of organizing the Company and  arranging  for
   the  offer and sale of Units (including commissions); (ii) for all
   Acquisition  Expenses incurred by them out of  the  proceeds  from
   the  initial  offering  of  Units, (iii)  for  the  services  they
   provide  in the sales effort of the Properties, and (iv)  for  the
   expenses  of  controlling persons and overhead  expenses  directly
   attributable   to   the  forgoing  services  or  attributable   to
   Administrative   Services  (which  overhead  expenses   shall   be
   allocated  based upon the amount of time personnel actually  spend
   providing such services, or such other method of allocation as  is
   acceptable  to  the Company's independent public  accountant).  In
   addition,  the  Company shall reimburse the Managing  Members  and
   their  affiliates  at  their  Cost for  (i)  Acquisition  Expenses
   related  to  properties purchased with Net  Proceeds  of  Sale  of
   other  properties, and (ii) for Administrative Expenses  necessary
   for  the  prudent  operation  of the Company,  provided  that  any
   expenses of controlling persons and overhead expenses included  in
   such  Administrative Expense reimbursements shall  be  subject  to
   the limitations set forth in Section 6.2(b).  The  Company   shall
   also pay to the Managing Member an Organization Fee, to compensate
   the Managing Member for expenditure of  its  own  funds  prior  to
   reimbursement and for the risk  that  such expenditures in forming
   the Company would not be reimbursed, in an amount equal to 1.5% of
   capital  contributions,  but  only  to   the   extent   that  such
   reimbursement,  when  combined  with  all   other Organization and
   Offering Costs, does not exceed 15% of capital contributions.

                       A-12

         (b)   The  aggregate cumulative reimbursements  pursuant  to
   Section  6.2(a)(i)  to  (iv)  to the Managing  Members  and  their
   Affiliates,  when  combined  with  the  Organization Fee, will not
   exceed, at the end of any fiscal year, the sum of (i)the Front-End
   Fees  of  up  to  20%  of  capital  contributions,  (ii)  property
   management fees of up to 1% of gross revenues on each lease,except
   for a one time initial leasing  fee of 3% of the gross revenues on
   each lease payable over the first five full years  of the original
   term of the lease,  (iii)  real  estate   commission  of 3% of Net
   Proceeds of Sale of properties  on which  the  Managing Members or
   Affiliates furnish a substantial amount of sales efforts, and (iv)
   10% of Net Cash Flow  less  the Net Cash Flow actually distributed
   to the Managing Members.  The  Managing   Members  will review the
   reimbursements  that they and their  Affiliates receive at the end
   of each fiscal year of the Company.  If  the  Managing Members and
   their  Affiliates  receive  reimbursement  for  items set forth in
   Section 6.2(a)(i) to (iv) in excess  of  the limitations set forth
   in this section,  they  will refund  the difference to the Company
   within 30 days of  discovery of such excess. Such review shall not
   take into account  any  of  the  fees  that might be paid in years
   after the fiscal  year  for which the calculation is made.

         (c)   The  Company's annual report to Limited  Members  will
   contain   information  concerning  reimbursements  made   to   the
   Managing  Member  and  its Affiliates. Within  the  scope  of  the
   annual  audit,  an  independent certified public accountant  shall
   verify  the  allocation of costs to the Company.  The  methods  of
   verification  shall  be  in  accordance  with  generally  accepted
   auditing  standards and shall, accordingly, include such tests  of
   the  accounting  records and such other auditing  procedures  that
   the  Managing  Member's independent certified  public  accountants
   consider  appropriate  in  the  circumstances.  Such  methods   of
   verification shall at a minimum provide: (i) a review of the  time
   records  of  employees and control persons,  the  costs  of  whose
   services were reimbursed and (ii) a review of the specific  nature
   of  the  work performed by each such employee and control  person.
   The  additional cost of such verification will be itemized by such
   accountant  on  a  program-for-program  basis,  and  the  Managing
   Members  will be reimbursed for such additional cost only  to  the
   extent  that  the  cost of such verification, when  added  to  all
   reimbursements  to the Managing Members for services  rendered  to
   the  Company,  does  not  exceed the competitive  price  for  such
   services   which  would  be  charged  by  non-affiliated   persons
   rendering  similar  services in the same or comparable  geographic
   location.

         (d)   The Managing Members and their Affiliates will not  be
   reimbursed or otherwise paid for any services except as set  forth
   in Section 6.2(a).

6.3   OTHER  ACTIVITIES  OF MANAGING MEMBERS. The  Managing  Members,
during  the  term  of  this Company, may engage  in  and  possess  an
interest  for their own account in other business ventures  of  every
nature and description, independently or with others, including,  but
not   limited  to,  the  ownership,  financing,  leasing,  operation,
management, syndication, brokerage, investment in and development  of
real  estate;  and neither the Company nor any Member, by  virtue  of
this  agreement,  shall  have any right in and  to  said  independent
ventures or any income or profits derived therefrom. Nothing in  this
section  shall be deemed to diminish the Managing Member's overriding
fiduciary obligation to the Company, or to constitute a waiver of any
right  or remedy the Company or Limited Members may have in the event
of a breach by a Managing Member of such obligation.

6.4  INDEMNIFICATION AND LIABILITY OF MANAGING MEMBERS.

         (a)   The  Company  shall indemnify  each  of  the  Managing
   Members  and  their  Affiliates (other than an Affiliate  that  is
   acting  in the capacity of a Broker-Dealer selling Units)  against
   any  claim  or  liability incurred or imposed upon  such  Managing
   Member  or  such  Affiliates  provided  such  Managing  Member  or
   Affiliate was acting on behalf of or performing services  for  the
   Company  and  the Managing Member has determined, in  good  faith,
   that the course of conduct which caused the loss or liability  was
   in  the  best  interests of the Company, and such conduct  of  the
   Managing  Member  or  Affiliate did not constitute  misconduct  or
   negligence.  The  Managing  Members or  Affiliates  shall  not  be
   liable  to  the  Company or any Member by reason  of  any  act  or
   omission  of  such  Managing  Member  or  Affiliate  provided  the
   Managing Member has determined, in good faith, that the course  of
   conduct  which  caused  the  loss or liability  was  in  the  best
   interests of the Company, and such conduct of the Managing  Member
   or  Affiliate did not constitute misconduct or negligence.  Solely
   for  purposes of this Section 6.4, but for all such purposes,  the
   term  "Affiliate" shall mean only those Affiliates, as defined  in
   Section  2.5,  that  furnish services to the  Company  within  the
   scope of the Managing Members' authority.

                       A-13

         (b)   No  Managing Member or Affiliate or any  Broker-Dealer
   selling  Units shall be indemnified for any liability  imposed  by
   judgment,  or  costs  associated therewith,  including  attorneys'
   fees,  arising  from  or out of a violation of  state  or  federal
   securities  laws.  The Managing Members and such  Affiliates,  and
   such  Broker-Dealers,  shall be indemnified  for  settlements  and
   related  expenses of lawsuits alleging securities law  violations,
   and   for   expenses  incurred  in  successfully  defending   such
   lawsuits,  provided that the party seeking indemnification  places
   before  the  court  the  position of the Massachusetts  Securities
   Division,   of   the   Missouri  Securities   Division,   of   the
   Pennsylvania Securities Commission, of the administrator of  other
   relevant  state securities laws and of the Securities and Exchange
   Commission  on indemnification for securities law violations,  and
   the court thereafter either:

              (i)    approves   the   settlement   and   finds   that
      indemnification of the settlement and related costs  should  be
      made, or

            (ii)  approves indemnification of litigation costs  if  a
      successful defense is made.

   Any  indemnification pursuant to this Section 6.4,  or  otherwise,
   shall  be recoverable only from the assets of the Company and  not
   from  any  of the Limited Members. No Managing Member or Affiliate
   shall  be entitled to advances for legal expenses and other  costs
   incurred  as  a  result  of  legal action  initiated  against  the
   Managing  Members  or Affiliate unless (1) the action  relates  to
   the  performance  of  the  duties  of  such  Managing  Member   or
   Affiliate  on  behalf  of  the Company,  (2)  the  action  is  not
   initiated  by a Limited Member, and (iii) the Managing  Member  or
   Affiliate undertakes to repay such advances in cases in  which  it
   is determined they are not entitled to indemnification.

         (c)  The Managing Member shall have fiduciary responsibility
   for  the  safekeeping  and  use of all funds  and  assets  of  the
   Company,  whether or not in its immediate possession  or  control,
   and  the  Managing Member shall not employ, or permit  another  to
   employ,  such  funds  or  assets in  any  manner  except  for  the
   exclusive  benefit of the Company. The Managing  Members  and  the
   Company  may not permit the Limited Members to contract  away  the
   fiduciary  duty  owed  to  the Limited  Members  by  the  Managing
   Members under the common law.

6.5    PROHIBITED  TRANSACTIONS.  Notwithstanding  anything  to   the
contrary contained herein, the Managing Members and Affiliates of the
Managing  Members  (i) may not receive interest and  other  financing
charges or fees on loans made to the Company in excess of the amounts
that  would otherwise be charged by unaffiliated lending institutions
on  comparable loans for the same purpose and in the same locality of
the  Property  if  the loan is made in connection with  a  particular
Property, (ii) may not require a prepayment charge or penalty on  any
loan  from the Managing Members to the Company, (iii) may not provide
financing  to the Company that is payable over a period exceeding  48
months  or  for which more than 50% of the principal is due  in  more
than 24 months, (iv) may not grant to themselves an exclusive listing
for  the sale of any Property, (v) may not directly or indirectly pay
or  award any commissions or other compensation to any person engaged
by  a  potential investor for investment advice as an  inducement  to
such adviser to advise the purchaser of the Units, provided, however,
that  this  provision shall not prohibit the normal sales commissions
payable  to  a  registered broker-dealer or other  properly  licensed
person  for  selling the Units, (vi) may not commingle Company  funds
with  the funds of any other person, (vii) may not sell property  to,
purchase  property  from, or lease property to or from  the  Company,
provided  that  the  Company  may purchase  real  property  from  the
Managing Members or their Affiliates if the Managing Members or their
Affiliates  purchased the property in their own name and  temporarily
held  title  thereto for a period not in excess of twelve months  for
the  purpose  of  facilitating the acquisition of the  property,  the
borrowing of money, the obtaining of financing for the Company or any
other  purpose  related  to the business  of  the  Company,  and  the
property is purchased by the Company for a price no greater than  the
price  paid  by  the  Managing  Members  or  their  Affiliates   plus
Acquisition  Expenses  in  accordance with  the  provisions  of  this
agreement, and any profit or loss on such property during such period
is  paid  to  or charged against the Company, and there is  no  other
benefit  arising out of such transaction to the Managing  Members  or
their Affiliates apart from compensation otherwise permitted by  this
agreement (the prohibitions of this Section 6.5(vii) shall also apply
to  any  program  in  which the Managing Members have  an  interest),
(viii)  may  not receive a commission or fee in connection  with  the
reinvestment or distribution of the proceeds of the resale,  exchange
or  refinancing of the Properties (ix) may not cause the  Company  to

                       A-14

incur indebtedness directly or indirectly related to the purchase  of
properties, from any source, (x) may not cause the Company to  invest
in   other  limited  partnerships  or  limited  liability  companies,
provided  that  joint venture arrangements set forth in  Section  6.6
shall  not  be prohibited, (xi) may not cause the Company to  acquire
property  in exchange for Units, (xii) may not cause the  Company  to
pay  a  fee to the Managing Members or their Affiliates for insurance
coverage  or brokerage services, (xiii) may not cause the Company  to
make  loans or investments in real property mortgages other  than  in
connection  with  the  purchase or sale of the Company's  properties,
(xiv)  may  not  cause the Company to operate in a manner  as  to  be
classified  as an "investment company" for purposes of the Investment
Company Act of 1940, (xv) may not cause the Company to underwrite  or
invest  in  the  securities of other issuers, except as  specifically
discussed  in Section 6.6 and in the Prospectus, (xvi) may not  cause
the  Company to incur the cost of that portion of liability insurance
that  insures  the  Managing  Members or  their  Affiliates  for  any
liability  as to which such Managing Members or their Affiliates  are
prohibited from being indemnified under Section 6.4, (xvii)  may  not
receive  a  real estate commission in connection with  the  purchase,
sale  or  financing  of  a  Property and will  not  permit  aggregate
compensation to others in connection with the sale of any Property to
exceed  a Competitive Real Estate Commission, (xviii) may not receive
an Acquisition Fee (including, without limitation, Development Fee or
Construction  Fee)  or permit such Acquisition  Fees,  together  with
Acquisition Expenses paid to any party, by the Company to exceed  18%
of  the  total capital contributions of Limited Members  pursuant  to
Section  4.2  of this agreement, (xix) may not cause the  Company  to
incur  Front-End  Fees to the extent that such fees would  cause  the
Company's  Investment in Properties to be less than  80%  of  capital
contributions,  (xx)  may  not receive  any  rebate  or  give-up  nor
participate  in any reciprocal business arrangement in  circumvention
of the NASAA Guidelines, nor shall any Managing Member participate in
any   reciprocal  business  arrangement  that  would  circumvent  the
restrictions of such NASAA Guidelines against dealing with affiliates
or  promoters, and (xxi) may not cause the Company to make any  loans
or advances at any time to the Managing Members or their Affiliates.

6.6   INVESTMENTS  IN OTHER PROGRAMS. The Company  may  not  purchase
limited partnership or limited liability company interests of another
program  and  will  not  purchase  general partnership interests in a
limited partnership.  The Company may, however, invest (a) in general
partnerships  or  joint  ventures  that  own and operate a particular
property provided the Company,  either  alone  or  together  with any
publicly-registered Affiliate,acquires a controlling interest in such
other ventures or general partnerships, and such general partnerships
or joint venture does  not  result  in duplicate fees, (b) in general
partnerships  or  joint ventures  with   another  publicly-registered
program sponsored by the  Managing Members  or  their  Affiliates, or
(c) in general partnerships  or  joint  ventures  with  the  Managing
Members or their Affiliates other  than  another publicly  registered
program.  For  purposes  of  Section   6.6(a), "controlling interest"
means an equity interest possessing the power to direct  or cause the
direction of the management and policies  of the partnership or joint
venture, including the authority to

            (i)   review  all contracts entered into by  the  general
      partnership  or joint venture that will have a material  effect
      on its business or property;

          (ii)   cause a sale or refinancing of the property  or  the
      Company's  interest  therein subject  in  certain  cases  where
      required  by  the  partnership or joint venture  agreement,  to
      limits  as  to  time, minimum amounts and/or a right  of  first
      refusal  by the joint venture partner or consent of  the  joint
      venture partner;

         (iii)   approve  budgets  and  major  capital  expenditures,
      subject to a stated minimum amount;

         (iv)    veto  any sale or refinancing of the  property,  or,
      alternatively,  to receive a specified preference  on  sale  or
      refinancing proceeds; and,

         (v)     exercise  a  right of first refusal on  any  desired
      sale  or  refinancing  by  the joint  venture  partner  of  its
      interest  in  the property except for transfer to an  Affiliate
      of the joint venture partner.

                       A-15

     For purposes of 6.6(b), the Company shall be permitted to invest
in    general    partnerships   or  joint   ventures   with   another
publicly-registered program  or  programs  sponsored by the  Managing
Members or  their Affiliates  for the purpose of acquiring a property
from  unaffiliated  parties  only if all the following conditions are
met:

          (a)  The   two   programs   have  substantially   identical
   investment objectives;

         (b)   There  are no duplicate property management  or  other
   fees;

         (c)   The  Managing Members' compensation  is  substantially
   similar in each program;

         (d)  In the event of a proposed sale of property held in the
   joint venture by the other joint venture member, the Company  will
   have  a  right  of  first refusal to purchase  the  other  party's
   interest; and

         (e)   The  investment by each of the programs in  the  joint
   venture must be upon substantially the same terms and conditions.

     For purposes of 6.6(c), the Company shall be permitted to invest
in general partnerships or joint  ventures  with the Managing Members
or their Affiliates  other than a publicly-registered program for the
purpose  of  acquiring a property  from unaffiliated parties only  if
all  the following conditions are met:

         (a)   The  investment is necessary to relieve  the  Managing
   Member  or  their Affiliates from any commitment to  purchase  the
   property  entered into in compliance with Section  6.5(vii)  prior
   to the closing of the offering period of the Company;

         (b)   There  are no duplicate property management  or  other
   fees;

         (c)   The  investment by each of the programs in  the  joint
   venture must be upon substantially the same terms and conditions;

         (d)  In the event of a proposed sale of property held in the
   joint venture by the other joint venture member, the Company  will
   have  a  right  of  first refusal to purchase  the  other  party's
   interest.



6.7   UNIMPROVED  OR  NON-INCOME  PRODUCING  PROPERTY/PROPERTY  UNDER
      CONSTRUCTION.

         (a)   The  Company may not acquire unimproved or  non-income
   producing property except in amounts and upon terms which  can  be
   financed  by  the Limited Members' capital contributions  or  from
   funds  provided  from operations. In no event  shall  the  Company
   acquire unimproved or non-income producing property exceeding  10%
   of  the total capital contributions of Limited Members pursuant to
   Section  4.2 of this agreement. For purposes of this Section  6.7,
   properties  that are expected to produce income within  two  years
   shall   not  be  considered  unimproved  or  non-income  producing
   properties.  Neither the Managing Members nor any  Affiliate  will
   develop, construct or provide Major Repairs or Rehabilitation  for
   properties,   or   render  services  in   connection   with   such
   activities;  provided that nothing in this section shall  prohibit
   an  unaffiliated third party from engaging in such  activities  on
   behalf of the Company.

         (b)   The  Company may not acquire property which  is  under
   construction  unless  completion is  guaranteed  at  the  purchase
   price  contracted  for by (i) a completion bond,  (ii)  a  written
   guarantee  of  completion by a person who,  or  entity  that,  has
   provided  financial statements demonstrating sufficient net  worth
   and  collateral, or (iii) retention of a reasonable portion of the
   purchase  price  as  an offset in the event the  seller  does  not
   perform.

6.8  INVESTMENTS IN JUNIOR TRUST DEEDS. The Company may not invest in
junior trust deeds and other similar obligations except to the extent
such  investments arise upon sale of Properties. In  no  event  shall
such investments exceed 10% of the gross assets of the Company.

                       A-16

6.9    REQUIREMENT   FOR  REAL  PROPERTY  APPRAISAL.   All   Property
acquisitions  by  the  Company  will be  supported  by  an  appraisal
prepared by a competent, independent appraiser. The appraisal will be
maintained in the Company's records for at least five years and  will
be available for inspection and duplication by any Limited Member.

6.10 BALLOON PAYMENTS.

         (a)   Any Indebtedness of the Company (which shall,  in  any
   event,  be subject to the limitations contained in Section 6.5(ix)
   of  this agreement) which is not fully amortized in equal payments
   over  a  period of not more than 30 years, shall have  a  maturity
   date  (due  date)  which is not earlier than ten years  after  the
   date  of  purchase of the underlying property or two  years  after
   the  anticipated  holding  period of the property  (provided  such
   holding  period is at least seven years); provided, however,  that
   this  Section 6.10(a) shall not limit the ability of  the  Company
   to finance Properties using adjustable rate mortgages.

         (b)   The  Company may not incur indebtedness of  any  kind,
   including  all-inclusive and wrap-around loans  and  interest-only
   loans, in connection with the purchase of a Property.

         (c)   The  provisions of this Section 6.10 shall  not  apply
   (but   the   provisions  of  section  6.5(ix)  shall   apply)   to
   indebtedness representing, in the aggregate, 25% or  less  of  the
   total  purchase price of all Properties acquired,  or  to  interim
   financing, including construction financing, with a full  take-out
   commitment.

6.11 SELLING COMMISSIONS.

         (a)  Except as otherwise provided in this Section 6.11,  the
   Company  shall  pay  any  and  all  Selling   Commissions   and  a
   nonaccountable expense allowances in the  amount of $1.00 per Unit
   sold  in  accordance  with  the  Dealer Manager Agreement with AEI
   Securities, Inc.  The  Company  shall  also  reimburse  the Dealer
   Manager for the bona fide due diligence expenses of dealers selling
   Units to the extent the aggregate   of  such reimbursements do not
   exceed  $0.05  per  Unit sold.

         (b)   The  dealer manager, a participating dealer  or  their
   respective  officers, employees or registered representatives  may
   purchase  Units at a per Unit purchase price of $9.35.  A  Limited
   Member  who purchases Units in an account managed by an investment
   advisor  who  receives compensation on a fee for  services  basis,
   and  is  affiliated  with  a participating  dealer  who  does  not
   receive  commissions on the purchase, may purchase at a  price  of
   $9.35 per Unit.

         (c)   The  Managing Member and its Affiliates  may  purchase
   Units at a per Unit purchase price of $9.35.


         (d)  Subject to agreement with the Limited Member purchasing
   the  Units, the participating dealer through which the  Units  are
   purchased,   and   AEI  Securities,  Inc.,  any   Limited   Member
   purchasing Units may purchase Units for an initial purchase  price
   of  $9.50 per Unit, provided the Limited Member agrees to apply to
   payment  of  deferred commissions $0.10 per  Unit  per  year  from
   distributions  of  Net Cash Flow and or Net Proceeds  of  Sale  of
   Properties  during  each  of the five  years  after  the  year  of
   purchase  of  the  Units. Subject to such agreement,  the  Company
   shall   pay   AEI   Securities,  Inc.  selling   commissions   and
   nonaccountable expenses of $0.50 per Unit upon admission  of  such
   Limited  Member to the Company and shall pay AEI Securities,  Inc.
   an  additional $0.10 per Unit (the "Deferred Commissions") on  the
   first  distribution date next following each  of  the  first  five
   anniversary dates of such admission; provided, however, that  such
   Deferred  Commissions shall be accelerated (i) upon any  attempted
   sale  or  transfer  of such Limited Member's Units  so  that  such
   transfer  is  conditioned on either the payment  of  all  deferred
   commissions   or  the  agreement  of  the  transferee   to   apply
   distributions  to  the payment of such deferred  commissions,  and
   (ii) upon the final dissolution and winding up of the Company  and
   shall be paid out of any proceeds otherwise distributable to  such
   Limited Member as a part of that liquidation.

                      A-17

6.12 ROLL-UP TRANSACTIONS.

         (a)   The  Company shall not participate in any Roll-Up  (i)
   which  would result in Limited Members having democracy rights  in
   the  Roll-Up  Entity which are less than those  provided  in  this
   Operating  Agreement (provided that, if the form  of  the  Roll-Up
   entity  is  other  than  a  Company, the  democracy  rights  shall
   conform  to  those  provided in this Operating  Agreement  to  the
   greatest  extent  possible); (ii) which includes  provisions  that
   would  act  to materially impede or frustrate the accumulation  of
   shares  of  any purchaser of the securities of the Roll-Up  entity
   (except to the extent required to preserve the tax status  of  the
   Roll-Up  Entity);  (iii) which would limit the rights  of  Limited
   Members  to exercise voting rights in the securities of the  Roll-
   Up  entity on the basis of the number of equity interests held  by
   such  Limited Members; (iv) which would result in a Roll-Up Entity
   which  would have rights to access of records less than  those  of
   the  Company; or (v) which provides for the costs of  the  Roll-Up
   to  be  borne by the Company and which is not approved by  Limited
   Members.

         (b)   No  Roll-Up shall be conducted unless an appraisal  of
   all  material  Company assets has been obtained from  a  competent
   person  or  entity that has no material current or prior  business
   or  personal  relationship  with the  Managing  Members  or  their
   Affiliates  and  who  is engaged to a substantial  extent  in  the
   business  of rendering opinions regarding the value of  assets  of
   the  type  held  by the Company and is qualified to  perform  such
   appraisal. The appraisal shall be based upon an evaluation of  all
   relevant  information,  assuming an  orderly  liquidation  of  the
   Company's  assets over a 12-month period, and shall  indicate  the
   value  of  the Company's material assets as of a date  immediately
   preceding  announcement  of the proposed  Roll-Up.  The  appraiser
   expert  performing the appraisal shall be engaged for the  benefit
   of  the Company and its Members. A summary of the appraisal  shall
   be  included in a report to the Limited Members in connection with
   the  Proposed Roll-Up and if such report is a part of a prospectus
   used  to  offer  securities in the Roll-Up Entity,  the  appraisal
   shall be filed with the SEC and the states in connection with  the
   registration statement for the offering.

         (c)  Any Limited Member who votes against a Roll-Up that  is
   completed,  shall be given the option to (i) accept the securities
   in  the  Roll-Up Entity in the Roll-Up, or (ii) either one of  (x)
   remaining  a  Limited Member in the Company or (y) receiving  cash
   in  the  amount  of  the  appraised value of  the  assets  of  the
   Company.

VII. PROVISIONS APPLICABLE TO LIMITED MEMBERS

     The following provisions shall apply to the Limited Members, and
the Limited Members hereby agree thereto.

7.1   LIABILITY. The Limited Members shall be liable with respect  to
the  Company only to the extent of the amount of the contribution  to
capital made by such Limited Members as provided in Section 4.2.  The
Units are non-assessable.

7.2  NO PARTICIPATION IN MANAGEMENT. No Limited Member shall take any
part or participate in the conduct of, or have any control over,  the
business  of the Company, and no Limited Member shall have any  right
or  authority  to act for or to bind the Company; provided,  however,
that  the Company may not sell all or substantially all of the assets
of the Company without the prior written consent of a majority of the
Limited Members, by interest.

7.3   NO  WITHDRAWAL OR DISSOLUTION. No Limited Member shall  at  any
time  withdraw from the Company except as provided in this agreement.
No  Limited Member shall have the right to have the Company dissolved
or  to  have  his or her contribution to the capital of  the  Company
returned  except  as  provided  in  this  agreement.  The  death   or
bankruptcy  of  a Limited Member shall not dissolve or terminate  the
Company.

7.4   CONSENT. To the fullest extent permitted by law,  each  of  the
Limited  Members  hereby  consents to the exercise  by  the  Managing
Member  of all the rights and powers conferred on the Managing Member
by this agreement.

                       A-18

7.5   POWER OF ATTORNEY. Each of the Limited Members and the  Special
Managing  Member  hereby  irrevocably  constitute  and  appoint   the
Managing Member his or her or its true and lawful attorney, in his or
her  or  its  name,  place  and stead to  make,  swear  to,  execute,
acknowledge and file:

         (a)   this  Operating Agreement and any and all certificates
   of  formation of the Company, and any amendments thereto that  may
   be  required  by  the  Limited Liability  Company  Act,  including
   amendments  required for the reflection of return  of  capital  to
   any  Member or the contribution of any additional capital, and the
   continuation  of  the  business of the  Company  by  a  substitute
   and/or additional Managing Member;

         (b)   any certificate or other instrument and any amendments
   thereto  that may be required to be filed by the Company in  order
   to  accomplish  the  business and the  purposes  of  the  Company,
   including  any  business certificate, fictitious name  certificate
   or assumed name certificate;

         (c)   any  cancellation of such certificates  of  formation,
   this  Operating  Agreement and any and  all  other  documents  and
   instruments  that  may  be  required  upon  the  dissolution   and
   liquidation of the Company;

         (d)  new certificates of formation and any and all documents
   and  instruments that may be required to effect a continuation  of
   the business of the Company as provided in this agreement; and

         (e)   any  amended  operating agreement  or  certificate  of
   formation  that  has  been  duly adopted hereunder  or  authorized
   hereby.

     It is expressly intended that the foregoing power of attorney is
(1) coupled with an interest and shall survive the bankruptcy, death,
incompetence  or dissolution of any person hereby giving  such  power
and  (2)  does not affect the Limited Members' rights to  approve  or
disapprove  any  amendments to this agreement  or  other  matters  as
provided elsewhere herein.

      If a Limited Member assigns his or her interest in the Company,
as  provided  in  Article IX, the foregoing power of  attorney  shall
survive the delivery of the instruments effecting such assignment for
the  purpose  of  enabling the Managing Member  to  sign,  swear  to,
execute  and  acknowledge  and file any and  all  amendments  to  the
certificates  of  formation of the Company and other instruments  and
documents necessary to effectuate the substitution of the assignee as
a Limited Member.

7.6   LIMITATION OF ACQUISITION OF EQUITY SECURITIES OF THE  MANAGING
MEMBERS. The Limited Members (excluding the Managing Members or their
Affiliates  who purchase Limited Liability Company Units)  shall  not
own,  directly or indirectly, individually or in the aggregate,  more
than  20%  of  the  outstanding equity securities of  either  of  any
Managing Member or its Affiliates.

      The phrase "own, directly or indirectly" used herein shall have
the meaning set forth in Section 318 of the Internal Revenue Code  of
1954, as currently in effect or as hereafter amended. As of the  date
hereof, such term includes ownership by a Limited Member, his or  her
spouse,  children, grandchildren, parents, any Company of  which  the
Limited  Member or any of the foregoing is a member,  any  estate  or
trust  of  which  the Limited Member or any of the foregoing  is  the
beneficiary  and any corporation at least 50% owned in the  aggregate
by said Limited Member or any of the foregoing.

                       A-19

7.7  RIGHT TO PRESENT UNITS FOR PURCHASE.

   (a)  Beginning  36  months from the date of the  Prospectus,  each
   Limited Member shall have the right, subject to the provisions  of
   this  Section 7.7, to present his or her Units to the Company  for
   repurchase by submitting a proper written request to the  Managing
   Member   specifying  the  number  of  Units  he  or   she   wishes
   repurchased.  Such notice must be postmarked after January  1  but
   before  January 31, and after July 1 but before July  31  of  each
   year (the "Presentment Periods"). On March 31 and September 30  of
   each  year  (hereafter, a "Repurchase Date"), and subject  to  the
   limitations  set  forth in Section 7.7 (c),  the  Managing  Member
   shall  cause  the  Company  to repurchase  the  Units  of  Limited
   Members  who  have  tendered  their  Units  to  the  Company.  The
   purchase price shall be equal to eighty-five percent (85%) of  the
   Net  Value Per Unit as of the preceding December 31 (in  the  case
   of  repurchases  as  of  March 31) or June  30  (in  the  case  of
   repurchases  as  of  September  30) (such  dates  being  hereafter
   referred   to   as   a  "Determination  Date"),   and   less   any
   distributions   to   the  tendering  Limited  Member   after   the
   Determination Date and prior to the Repurchase Date. The  Managing
   Members  shall  publish  the repurchase price  offered  for  Units
   based  on its determination of the Net Value per Unit as  soon  as
   possible after each Determination Date.

   (b)  Beginning  36  months from the date of  the  Prospectus,  and
   subject  to  the  conditions  and limitations  described  in  this
   Section  7.7,  the Managing Member may repurchase Units  upon  the
   death  of  a  Limited  Member who is a natural  person,  including
   Units  held by a Limited Member in an IRA or other qualified plan,
   upon  receipt  of  a  proper  written  request  from  the  Limited
   Member's  estate  or  from  the recipient  of  the  Units  through
   bequest  or  inheritance. Written notice must be  received  within
   180  days  after  the death of the Limited Member  accompanied  by
   evidence  of  the  death of the Limited Member acceptable  to  the
   Managing  Member,  and executed by the executor/executrix  of  the
   estate,  the  heir or beneficiary, or their trustee or  authorized
   agent.  If  the  Units are held jointly and either  of  the  joint
   owners  dies, the written request may be made and executed by  the
   surviving  joint  owner. The price paid for the Units  repurchased
   upon  death  will  be  equal to 100% of the  Net  Value  per  Unit
   established as of the preceding Determination Date, and  less  any
   distributions to the tendering Limited Member after the  preceding
   Determination  Date  and  prior to the  Repurchase  Date.  On  the
   Repurchase Dates referenced in Section 7.7 (a) and subject to  the
   limitations  set  forth in Section 7.7 (c),  the  Managing  Member
   shall  cause  the  Company  to repurchase  the  Units  of  Limited
   Members  who  have  tendered their Units to the  Company.  If  the
   Limited  Member  is a trust, partnership, corporation  or  similar
   entity,  and/or  the  units were not acquired  directly  from  the
   Company, these rights of presentment for repurchase upon death  do
   not apply.

         (c)   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 the event requests for  purchase  of
   Units  received  in  any given year exceed the  two  percent  (2%)
   limitation,  the  Units to be purchased will be  determined  based
   upon  the  postmark date of the written notice of Limited  Members
   tendering Units. Any Units tendered but not selected for  purchase
   in  any  given year will be considered for purchase in  subsequent
   years  only if the Limited Member retenders his or her  Units.  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  nor  shall  the
   Company  purchase  any  Units  in violation  of  applicable  legal
   requirements.

         (d)  For purposes of all calculations pursuant to Article  V
   of  this agreement, any Net Cash Flow or Net Proceeds of Sale used
   to  repurchase  Units or to repay borrowings  that  were  used  to
   repurchase  Units  shall be deemed distributed  to  the  remaining
   Limited  Members pro rata based upon the ratio of  the  number  of
   Units owned to all Units outstanding after such repurchase.

  7.8  VOTING  RIGHTS.  To  the extent permitted  under  the  Limited
Liability Company Act, as amended, the Limited Members may,  by  vote
of  a majority of the outstanding Units (excluding Units held by  the
Managing Members for their own accounts), and without the concurrence
of the Managing Members:

         (1)   amend this Operating Agreement in accordance with  the
   provisions of Article XI;

         (2)   remove  the Managing Member and elect a  new  Managing
   Member in accordance with Section 10.4 of this agreement;

                       A-20

         (3)   approve or disapprove the sale of all or substantially
   all of the assets of the Company;

         (4)   dissolve the Company in accordance with Section 12.1(g).


VIII.     BOOKS OF ACCOUNT; REPORTS AND FISCAL MATTERS

8.1   BOOKS;  PLACE;  ACCESS.  The  Managing  Member  shall  maintain
accurate  books  of account and each and every transaction  shall  be
entered  therein.  The Company records shall contain  the  names  and
addresses  of  all Members and shall maintain, for a  period  of  six
years  after  completion  of the offering of  Units,  copies  of  all
subscriptions and other materials used to determine that the purchase
of  the  Units  was suitable for each Limited Member.  The  books  of
account and the records shall be kept at the office of the Company in
St.  Paul, Minnesota, and any Member or his or her legal counsel  may
inspect  and  copy the Company books and records at any  time  during
ordinary business hours. The Managing Member shall have no obligation
to  deliver  or  mail  to Limited Members copies of  certificates  of
formation or amendments thereto.

8.2   METHOD.  The books of account shall be kept in accordance  with
generally accepted accounting principles.

8.3   FISCAL  YEAR.  The  fiscal year of the  Company  shall  end  on
December 31 of each year.

8.4   ANNUAL  REPORT. At the Company's expense, the books of  account
shall  be  audited  at the close of each fiscal year  by  a  firm  of
independent public accountants selected by the Managing Member, and a
copy  of  its report shall be transmitted within 120 days  after  the
close of such fiscal year to the Members and to such state securities
commissioners as may be required by the rules and regulations of  the
various states.

      The  annual report shall contain (a) a balance sheet as of year
end,  a  statement of operations for the year then ended, a statement
of  Members' equity, and statement of cash flows, all of which  shall
be  audited with a report containing an unqualified opinion expressed
thereon,  or  an opinion containing no material qualification  of  an
independent public accountant, (b) a report of the activities of  the
Company during the period covered by the report and (c) the amount of
any  fees  or  other reimbursements to the Managing  Members  or  any
Affiliates  of the Managing Members during the fiscal year  to  which
such annual report relates, including information required by Section
6.2. Such report shall set forth distributions to Limited Members for
the   period   covered   thereby  and   shall   separately   identify
distributions from (i) cash flow from operations during  the  period,
(ii)  cash flow from operations during a prior period that  had  been
held as reserves, (iii) proceeds from the disposition of property and
investments and (iv) reserves from the gross proceeds of the offering
originally   obtained  from  the  Limited  Members.   The   financial
information  contained in the annual report will be prepared  on  the
GAAP  basis. The annual report will also include the estimate of  the
value  of a unit in the Company determined by our Managing Member,  a
statement of the method used to develop this estimated value, and the
date  of  the data used to develop the estimated value. The  Managing
Member  also  shall  make  available to  each  Limited  Member,  upon
request,  a  copy  of  any annual reports that  the  Company  may  be
required  to file with the Securities and Exchange Commission  within
90 days after the close of the period to which such reports relate.

8.5   QUARTERLY REPORTS. During the life of the Company, the Managing
Member  shall  prepare and distribute to all Members within  60  days
after   the  end  of  each  quarter  and  to  such  state  securities
commissioners as may be required by the rules and regulations of  the
various  states,  a  quarterly summary of Company financial  results.
Such  quarterly reports shall contain (a) a current condensed balance
sheet,  which  may be unaudited, (b) a condensed operating  statement
for  the  quarter then ended, which may be unaudited, (c) a condensed
cash  flow  statement  for  the quarter  then  ended,  which  may  be
unaudited, and (d) other pertinent information regarding the  Company
and  its  activities during the quarter covered by the  report.  Such
quarterly  reports  shall also contain a detailed  statement  setting
forth  the  services  rendered, or to be rendered,  by  the  Managing
Members or their Affiliates and the amount of the fees received.  The
Managing  Member  also shall make available to each  Limited  Member,
upon  request, a copy of any reports that the Company may be required
to  file  with the Securities and Exchange Commission within 45  days
after the close of the period to which such reports relate.

8.6  SPECIAL REPORTS. The Managing Member shall have prepared, as  of
the  end  of each quarter in which a Property is acquired, a  special
report of real property acquisitions within the quarter. Such special

                       A-21

reports  shall be distributed to the Limited Members for each quarter
in which a Property is acquired until all proceeds available from the
offering of Units are invested or returned to the Limited Members  as
provided  in  Section 4.5. Such special reports  shall  describe  the
Properties  acquired, the terms of the lease affecting the  property,
the  tenant  and use of the property, and shall include a description
of  the  geographic location and the market upon which  the  Managing
Member  is  relying. The special report shall include all facts  that
reasonably appear to materially influence the value of the  Property,
including,  but not limited to, the date and amount of the  appraised
value,  the  receipt  of  a  commitment of  title  insurance  and  if
development  is required on the property, the receipt of  appropriate
completion  bonds, the purchase price and terms of the purchase,  the
amount  of  proceeds  in  the  Company  that  remain  unexpended   or
uncommitted and any Acquisition Expenses paid by the Company  to  the
Managing Members or their Affiliates in connection with real property
acquisitions within the quarter.

8.7  TAX RETURNS; TAX INFORMATION. Within 75 days after the close  of
each  fiscal year, all necessary tax information shall be transmitted
to  all Members and to such state securities commissioners as may  be
required by the rules and regulations of the various states.

8.8   BANK ACCOUNTS. Except as otherwise described in the Prospectus,
the  Managing Member shall select a bank account or accounts for  the
funds of the Company, and all funds of every kind and nature received
by  the  Company shall be deposited in such account or accounts.  The
Managing  Member  shall  designate from  time  to  time  the  persons
authorized  to withdraw funds from such accounts. The  funds  of  the
Company  will  not be commingled with funds of any  other  person  or
entity.

8.9   TAX ELECTIONS. In the event of a transfer of all or part of the
Company  interest of any Member, the Company, in the sole  discretion
of  the  Managing Member, may elect pursuant to Section  754  of  the
Internal Revenue Code of 1986 (or any successor provisions) to adjust
the basis of the assets of the Company. The Managing Member shall  be
the "tax matters partner" for the Company as that term is defined  in
Section 6231 of the Internal Revenue Code of 1986, as amended.

8.10  INVESTOR  LIST. In addition to the other records maintained  by
the Company, the Company shall maintain at all times, in alphabetical
order  and  on  white paper with printing in not less than  10  point
type,  a list of Limited Members, including the names, addresses  and
business  telephone numbers of the Limited Members and the number  of
Units  held  by  each, which shall be updated at least  quarterly  to
reflect  changes in the information contained therein.  The  list  of
Limited  Members  shall be available for inspection  by  any  Limited
Member or such Limited Member's designated agent at the office of the
Company  upon request of such Limited Member. In addition, a copy  of
the  Limited  Member  list  shall be mailed  to  any  Limited  Member
requesting the same within ten (10) days of the receipt of a  written
request.  The  Company may charge a reasonable fee  to  such  Limited
Member  to cover the costs of reproduction and postage. The  purposes
for  which  such list may be requested by the Limited  Members  shall
include, without limitation, matters relating to voting rights of the
Limited  Members  and the exercise of rights of the  Limited  Members
under  federal proxy laws. If the Managing Member neglects or refuses
to  exhibit,  produce or mail a copy of the Limited  Member  list  as
requested,  the  Managing  Member shall  be  liable  for  the  costs,
including  attorneys'  fees,  incurred  by  the  Limited  Member   in
compelling  the  production of the list and for  the  actual  damages
suffered  by the Limited Member by reason of such refusal or neglect.
It  shall  be  a defense that the actual purpose and reason  for  the
request for inspection or for a copy of the Limited Member list is to
secure such list or other information for the purpose of selling such
list or copies thereof, or of using the same for a commercial purpose
other  than  in  the interest of the applicant as  a  Limited  Member
relative  to  the  affairs of the Company. The  Managing  Member  may
require the Limited Member requesting such list to represent that the
list  is  not  requested for a commercial purpose  unrelated  to  the
Limited Member's interest in the Company. For all such purposes,  the
acquisition  of  additional Units shall be  considered  a  commercial
purpose  unrelated to the Limited Member's interest in  the  Company.
The  Managing Member may also require, as a condition to making  such
list available, (i) that the list be requested under the signature of
the Limited Member of record rather than a person or entity holding a
power of attorney for such Limited Member; and (ii) whenever the list
will  be  used  to  solicit purchases of Units, that  the  requesting
Limited  Member agree to provide materials to the persons  solicited,
and  to  the  Managing Member for review and comment  prior  to  use,
generally complying with the disclosure requirements of Section 14(d)
of  the  Securities  Exchange Act of 1934 and Rule 14d-6  promulgated
thereunder,  including, without limitation, the price  at  which  the
Fund  last  agreed to repurchase Units and the price at  which  Units
were  last  purchased  in  any  secondary  trading  service  that  is
published, prominently displayed in type size no less than 14  point;
provided, however, that the Managing Member may not refuse to provide
the  list if the materials contain the foregoing information  because

                       A-22

it  is  not  otherwise satisfied with the materials to be  sent.  The
remedies set forth in this section 8.10 shall be in addition to,  and
not  by  way of limitation of, remedies available to Limited  Members
under federal law, or the laws of any state.

IX.  ASSIGNMENT OF LIMITED MEMBER'S INTEREST

     The Company interest of a Limited Member shall be represented by
a   Certificate  of  Participation.  The  form  and  content  of  the
Certificate  of  Participation shall be determined  by  the  Managing
Member. The Company interest of a Limited Member may not be assigned,
pledged,  mortgaged, sold or otherwise disposed of,  and  no  Limited
Member  shall have the right to substitute an assignee in his or  her
place, except as provided in this Article IX.

9.1   LIMITATIONS  ON  TRANSFER RELATED TO  TAX  STATUS.  Other  than
pursuant to a Permitted Transfer, no Limited Member shall transfer or
assign  any part of his or her interest in the Company, and  no  such
transfer  or assignment shall be recognized by the Company but  shall
be  null and void, if such transfer or assignment, when added to  all
other  transfers  or assignments made during the  same  fiscal  year,
other  than  (A) Permitted Transfers, (B) Qualified Matching  Service
Transfers, or (C) transfers pursuant to the repurchase provisions  of
section  7.7  of  this agreement, would constitute  transfers  of  in
excess  of  two  percent (2%) of Company interests  outstanding.  The
Managing  Member  may  request such information from  a  transferring
Limited Member as is necessary to determine whether a transfer  is  a
Permitted  Transfer  or  a Qualified Matching Service  Transfer.  The
Managing Member may refuse to affect any transfer if the transferring
Limited  Member  is  unable,  or refuses,  to  demonstrate  that  the
transfer  is  a  Permitted  Transfer or  Qualified  Matching  Service
Transfer  or  if  the Managing Member is not able to verify,  to  its
satisfaction, that the transfer will qualify for a safe harbor  under
Treasury Regulation 1.7704-1(e) or (g).

9.2   PROTECTIVE  PROVISIONS RELATING TO TRANSFER FRAUD.  No  Limited
Member  shall be obligated to sell, assign or transfer any  Units  or
any  other  interest  in the Company, prior to  receipt  of  adequate
disclosure relating to the Company. The Company shall provide to  any
Limited Member, upon request and without charge, prior to the date of
any  transfer,  copies of the most recent reports (forms  10-Q,  10-K
etc.)   filed  by  the  Company  with  the  Securities  and  Exchange
Commission, together with information relating to the Net  Value  Per
Unit as of the most recent Determination Date. Other than pursuant to
a  Permitted Transfer, no Limited Member shall transfer any  part  of
his  or  her  interest  in  the Company,  and  no  such  transfer  or
assignment or any agreement executed by a Limited Member with respect
to such transfer or assignment shall be recognized by the Company but
shall  be  null  and  void,  unless such Limited  Member  shall  have
confirmed  in writing to the Managing Member that he or she  received
and reviewed such information relating to Net Value Per Unit at least
24  hours prior to completion of transfer, and has received copies of
such  reports  as he or she may have requested. For purposes  of  the
foregoing,  confirmation on behalf of a Limited Member  by  power  of
attorney  shall  not  be effective unless the attorney  so  appointed
provides  proof  acceptable to the Managing  Member  of  the  Limited
Member's incapacity to provide confirmation directly.

9.3   RIGHT  OF  FIRST REFUSAL. Except with respect to (A)  Permitted
Transfers, (B) Qualified Matching Service Transfers, or (C) transfers
pursuant  to  the  repurchase  provisions  of  section  7.7  of  this
agreement,  no  Member (the "Offering Member") may assign,  transfer,
convey  or otherwise dispose of all or any part of any Unit  directly
or  indirectly  unless  such Member shall have given  notice  ("Offer
Notice") in writing to the Company, setting forth the number of Units
(the  "Offered  Units")  to be transferred,  the  consideration  (the
"Offer Price") for which such Units would be transferred. Subject  to
the  terms  and  conditions hereinafter set forth, the Company  shall
have  the right to purchase all but not less than all of the  Offered
Units  at  the  Offer Price. The Company may exercise such  right  by
delivering to the Offering Member its election to exercise within  15
days  after  the  date on which the Company has  received  the  Offer
Notice.  Subject to the limitations set forth in Section  9.1  (which
shall  be  controlling),  the closing of any  such  purchase  by  the
Company  shall occur within 60 days of such exercise by  delivery  of
payment  on the same terms as specified in the Offer Notice.  Offered
Units  purchased by the Company shall be canceled. Unless  all  Units
are purchased pursuant to the option granted in this Section 9.3, the
Offering  Member  shall be free, for a period of 90  days  after  the
expiration of such fifteen day period, to sell the Offered  Units  to
the  proposed transferee on the same terms as were described  in  the
Offer  Notice. Unless the transfer is approved by the Managing Member
in accordance with this Article IX and the transferee acknowledges in
writing that he, she or it is bound by the terms of this Agreement as
provided in Section 9.5, the transferee shall not become a Member  of
the Company but shall only be an assignee of the financial rights  of

                       A-23

his, her or its assignor. Any Member who transfers all of his, her or
its  financial rights shall cease to be a Member of the Company.  All
notices shall be in writing.

9.4   TRANSFERS. Except as provided in Section 9.1, 9.2 and 9.3, each
Limited  Member  may transfer or assign all or part  of  his  or  her
interest in the Company as provided in the Limited Liability  Company
Act;  provided,  however, that no transfer  or  assignment  shall  be
effective  until written notice thereof is received by  the  Managing
Member  and the Managing Member approves such transfer or assignment.
Such  approval shall be granted unless the Managing Member determines
that  the transfer will cause a violation of the provisions  of  this
agreement,  including  the  percentage  limitations  referred  to  in
Section  9.1 above and the provisions of section 9.2 or 9.3.  In  any
case  that  a  transfer is not permitted for any  reason  other  than
pursuant to the limitations set forth in section 9.1, 9.2 or 9.3, the
decision to prohibit the transfer shall be supported by an opinion of
counsel.  All  transfers or assignments of interests in  the  Company
occurring  during  any  month shall be deemed  effective  (i.e.,  the
transferee shall become a Limited Member of record) on the  last  day
of  the calendar month in which written notice thereof is received by
the Managing Member.

9.5   ADMISSION OF ASSIGNEE AS MEMBER. No assignee of all or part  of
the  Company interests of any Limited Member shall have the right  to
become a substitute Limited Member unless (i) his or her assignor has
confirmed  the  matters set forth in Section 9.2,  (ii)  his  or  her
assignor  has stated such intention in the instrument of  assignment,
(iii)  such assignee shall pay all expenses in connection  with  such
admission as a substitute Limited Member, as described in Section 9.8
and  (iv)  the transfer to such assignee has been made in  compliance
with  Section 9.1 and 9.3. By executing and adopting this  agreement,
each Limited Member hereby consents to the admission of additional or
substitute Limited Members by the Managing Member and to any assignee
of his or her Units becoming a substitute Limited Member.

9.6   MINIMUM  SIZE. No purported sale, assignment or transfer  by  a
Limited  Member  of  less  than  500  Units  will  be  permitted   or
recognized,  except  by  gift, inheritance,  intra-family  transfers,
family dissolutions, transfers to Affiliates or by operation of law.

9.7   DEATH OF LIMITED MEMBER. If a Limited Member dies, his  or  her
executor,  administrator or trustee, or if  he  or  she  is  adjudged
incompetent or insane, his or her guardian or conservator, or  if  he
or  she  becomes  bankrupt, the receiver or trustee  of  his  or  her
estate, shall have the rights of a Limited Member for the purpose  of
settling or managing his or her estate and such power as the decedent
or  incompetent possessed to assign all or any part  of  his  or  her
Units  and to join with the assignee thereof in satisfying conditions
precedent to such assignee becoming a substitute Limited Member.  The
death, dissolution or adjudication of incompetency or bankruptcy of a
Limited Member shall not dissolve the Company.

9.8   DOCUMENTS  AND  EXPENSES.  As a condition  to  admission  as  a
substitute Limited Member, an assignee of all or part of the  Company
interest of any Limited Member or the legatee or distributee  of  all
or  any  part  of  the Company interest of any Limited  Member  shall
execute  and  acknowledge such instruments,  in  form  and  substance
satisfactory  to  the Managing Member, as the Managing  Member  shall
deem  necessary  or  advisable to effectuate such  admission  and  to
confirm the agreement of the person being admitted as such substitute
Limited Member to be bound by all of the terms and provisions of this
agreement.  Such  assignee,  legatee or  distributee  shall  pay  all
reasonable  expenses,  not exceeding $100, in  connection  with  such
admission as a substitute Limited Member.

9.9   ACQUIT COMPANY. In the absence of written notice to the Company
of any assignment of a Company interest, any payment to the assigning
Member  or  his  or her executors, administrators or  representatives
shall  acquit the Company of liability to the extent of such  payment
to  any  other  person who may have an interest in  such  payment  by
reason  of an assignment by the Member or by reason of such  Member's
death or otherwise.

9.10   RESTRICTION   ON  TRANSFER.  Notwithstanding   the   foregoing
provisions  of  this  Article IX, no sale or exchange  of  a  Company
interest  may be made if the interest sought to be sold or exchanged,
when  added  to  the  total of all other Company  interests  sold  or
exchanged  within the period of 12 consecutive months prior  thereto,
would  result in the termination of the Company under section 708  of
the Internal Revenue Code of 1986 (or any successor section).

                       A-24

9.11  ENDORSEMENT ON CERTIFICATE. The foregoing provisions  governing
the  assignment of the Company interest of a Limited Member shall  be
indicated  by  an  endorsement  on the  certificate  evidencing  such
Limited  Member's interest in the Company, in the form as  determined
from time to time by the Managing Member.

X.   DEATH, WITHDRAWAL, EXPULSION AND REPLACEMENT OF THE MANAGING
     MEMBERS

10.1 DEATH. In the event of the death of the Special Managing Member,
the  estate  of the Special Managing Member shall assume all  of  his
obligations  under  this  agreement  and  be  responsible  for  their
discharge.  The  estate may elect to withdraw from the  Company  only
upon satisfaction of the conditions in Section 10.2 applicable to the
Special Managing Member.

10.2  WITHDRAWAL.  The  Managing Member may  not  withdraw  from  the
Company  without  first  providing 90 days'  written  notice  to  the
Limited  Members  of  its  intent to  so  withdraw  and  providing  a
substitute Managing Member to the Company that shall be accepted by a
vote of not less than a majority, by interest, of the Limited Members
(excluding any Limited Company Units held by any Managing Member  for
its  own  account); provided, however, that nothing in this Agreement
shall   be   deemed   to   prevent  the  merger,   consolidation   or
reorganization of the Managing Member into or with a successor entity
controlled  by, or under common control with, a Managing Member,  and
such  successor entity shall be deemed to be the Managing  Member  of
the  Company  for all purposes and effects and shall succeed  to  and
enjoy  all  rights and benefits and bear all obligations and  burdens
conferred or imposed hereunder upon the Managing Member. The  Limited
Members  shall  vote  to  accept or reject  the  proposed  substitute
Managing  Member  in person or by proxy at a meeting  called  by  the
Managing Member for such purpose in accordance with Section  11.1  of
this agreement.

      The  Special Managing Member may not withdraw from the  Company
prior to December 31, 2006.

10.3  EXPULSION. A Managing Member shall be expelled without  further
action  for "cause," which means (1) final judicial determination  or
admission  of its bankruptcy or insolvency, (2) withdrawal  from  the
Company  without providing a substitute Managing Member in accordance
with Section 10.2 or (3) final judicial determination that it (i) was
grossly  negligent  in its failure to perform its  obligations  under
this  agreement, (ii) committed a fraud upon the Members or upon  the
Company,  or  (iii)  committed  a  felony  in  connection  with   the
management  of  the Company or its business. This  section  does  not
limit the right of the Limited Members to remove the Managing Members
upon a majority vote of the Limited Members.

10.4 REMOVAL AND REPLACEMENT OF MANAGING MEMBERS. In the event of (i)
the  wrongful withdrawal of a Managing Member or the expulsion  of  a
Managing Member under circumstances that the Company lacks a Managing
Member or (ii) the written proposal of Limited Members holding 10% or
more of the issued and outstanding Units, and upon providing not less
than  10  nor more than 60 days' written notice by certified mail  to
all  Members, the Limited Members may call a meeting of  the  Company
for  the  purpose of removing or replacing any or all of the Managing
Members. At such meetings, any of the Managing Members may be removed
or  replaced without cause by a vote (rendered in person or by proxy)
of  a  majority, by interest, of the Limited Members (excluding Units
held by the Managing Members for their own accounts).

10.5  PAYMENT  FOR  REMOVED  MANAGING  MEMBER'S  INTEREST.  Upon  the
expulsion,  withdrawal or removal of a Managing Member,  the  Company
shall  pay to the terminated Managing Member all amounts then accrued
and  owing to the terminated Managing Member and an amount  equal  to
the  then  present  fair  market value  of  the  terminated  Managing
Member's  interest  in the Company determined  by  agreement  of  the
terminated Managing Member and the Company, or, if they cannot agree,
by  arbitration  in  accordance with the then current  rules  of  the
American Arbitration Association. The expense of arbitration shall be
borne equally by the terminated Managing Member and the Company.  The
fair  market value of the terminated Managing Member's interest shall
be  the  amount  the  terminated Managing Member would  receive  upon
dissolution  and  termination  of  the  Company  assuming  that  such
dissolution  or  termination occurred on the date of the  terminating
event  and  the assets of the Company were sold for their  then  fair
market  value  without any compulsion on the part of the  Company  to
sell  such  assets.  In  the  case of  a  voluntary  withdrawal,  the
withdrawing  Managing Member shall be paid the fair market  value  of
its  or his interest by the issuance by the Company of a non-interest
bearing  unsecured promissory note providing for payment of principal
from  distributions  that the withdrawing Managing  Member  otherwise
would  have  been entitled to receive under this agreement  had  such
Managing  Member  not  withdrawn.  In  the  case  of  an  involuntary
termination,  the terminated Managing Member shall be paid  the  fair

                       A-25

market value of its or his interest by the issuance by the Company of
a  promissory  note with a five-year maturity payable in  five  equal
installments of principal and interest at the prevailing market  rate
of interest.

10.6 FAILURE TO ADMIT SUBSTITUTE MANAGING MEMBER. In the event that a
substitute  Managing Member has not been appointed  and  admitted  as
provided in Section 10.4 so that there is no Managing Member  acting,
the Company shall then be dissolved, terminated and liquidated.

XI.  AMENDMENT OF AGREEMENT AND MEETINGS

11.1  GENERAL.  Either Managing Member may, at any time,  propose  an
amendment  to this agreement and shall notify all Members thereof  in
writing, together with a statement of the purpose(s) of the amendment
and  such other matters as the Managing Member deems material to  the
consideration of such amendment. If such proposal does not  adversely
affect  the  rights  of the Limited Members, such proposal  shall  be
considered  adopted and this agreement deemed amended. At  any  time,
Limited  Members  holding  not  less  than  10%  of  the  issued  and
outstanding  Units may propose an amendment to this agreement,  or  a
meeting  of Limited Members to consider any other proposal for  which
the Limited Members may vote hereunder, including the sale of all  or
substantially all of the assets of the Company. Upon the  request  in
writing  to  the  Managing Member of any person entitled  to  call  a
meeting,  or  in the event a proposal of a Managing Member  adversely
effects  the rights of Limited Members, or in the event of  objection
by  10%  of  Limited  Members by interest to  such  a  proposal,  the
Managing Member shall call a special meeting of all Members, in  each
case  at  a  location convenient to Limited Members, to consider  the
proposal  at the time requested by the person requesting the  meeting
which  shall be not less than 15 nor more than 60 days after  receipt
of  such request. Written notice of the meeting shall be given to all
Members either personally or by certified mail not less than  10  nor
more than 60 days before the meeting, but in any case where a meeting
is  duly called by request of Limited Members, not more than 10  days
after  receipt  of such request. Included in the notice  shall  be  a
detailed  statement  of  the action proposed,  including  a  verbatim
statement of the wording of any resolution or amendment proposed. The
notice  shall provide that Limited Members may vote in person  or  by
proxy.  The  affirmative  vote of a majority,  by  interest,  of  the
Limited Members (excluding any Units held by the Managing Members for
their  own accounts) shall decide the matter, without the consent  of
the  Managing Members. In any event, however, no such amendment shall
affect  the allocation of economic interests to the Members or  alter
the  allocation  of Company management responsibilities  and  control
without  the  approval  of each Managing Member  and  a  majority  by
interest,  of  the Limited Members, except as otherwise  provided  in
Article X.

11.2 ALTERNATIVE TO MEETINGS. As an alternative to voting at meetings
of the Company pursuant to this and other Articles of this agreement,
the  Limited Members may consent to and approve by written action any
matter that the Limited Members may consent to and approve by vote at
a  meeting. In order to consent to and approve the matter,  the  same
percentage  of  Limited Members, by interest, must sign  the  written
action  as is required by vote at a meeting; provided, however,  that
written  notice  is  given to all Members at  least  15  days  before
solicitation of signatures is begun.

XII. DISSOLUTION AND LIQUIDATION

12.1  EVENTS CAUSING DISSOLUTION. The Company shall be dissolved only
upon the occurrence of one or more of the following events:

        (a)  the expiration of the term set forth in Section 1.4;

         (b)  the occurrence of any event that, under the laws of the
   jurisdictions governing the Company shall dissolve the Company;

         (c)   the  bankruptcy of the Company or any of the  Managing
   Members;

         (d)  the withdrawal or the expulsion of a Managing Member if
   a  substitute  Managing  Member has not been  timely  admitted  as
   provided  in Article X, with the result that there is no  Managing
   Member acting;

                       A-26

         (e)   the decree of court that other circumstances render  a
   dissolution of the Company equitable or required by law;

         (f)   the  sale or other disposition of all or substantially
   all of the assets of the Company; and

         (g)   at any time by the affirmative vote of a majority,  by
   interest,  of  the Limited Members (excluding Units  held  by  the
   Managing  Members for their own accounts) at a meeting  called  in
   accordance with Section 11.1 of this agreement.

12.2  CONTINUATION OF BUSINESS. Except as provided in  Section  12.3,
upon  the dissolution of the Company for any reason, the business  of
the  Company and title to the property of the Company shall be vested
in  the Company continuing the business. Upon any such dissolution no
Member, nor his or her legal representatives, shall have the right to
an  account  of his or her interest as against the Company continuing
the business, and no Member, nor his or her legal representatives, as
against the Company continuing the business, shall have the right  to
have  the  value of his or her interest as of the date of dissolution
ascertained  nor  have  any  right as a creditor  or  otherwise  with
respect to the value of his or her interest.

12.3 LIQUIDATION AND WINDING UP. If dissolution of the Company should
be  caused by reason of (a) an event that makes it unlawful  for  the
business of the Company to be carried on or for the Members to  carry
it  on  in  the Company, (b) the bankruptcy of the Company,  (c)  the
withdrawal  or  expulsion  of a Managing  Member  and  no  substitute
Managing  Member has been timely admitted as provided in  Article  X,
with the result that there is no Managing Member acting, (d) a decree
of court that other circumstances render a dissolution and winding up
of  the affairs of the Company equitable or required by law, (e)  the
sale  of  all or substantially all of the assets of the Company,  (f)
the  express  will of Limited Members as provided in Section  12.1(g)
above,  the  Company shall be liquidated and the Managing Member  (or
the  person or persons selected by a decree of court to carry out the
winding  up of the affairs of the Company) shall wind up the  affairs
of the Company.

      The Managing Member or the person winding up the affairs of the
Company   shall  promptly  proceed  to  liquidate  the  Company.   No
distribution upon liquidation in kind of property and assets shall be
made to Limited Members. In settling the accounts of the Company, the
assets  and the property of the Company shall be distributed  in  the
following order of priority:

         (a)   To  the  payment of all debts and liabilities  of  the
   Company,   including  loans  by  Members  that  are   secured   by
   mortgages,  but  excluding any other loans or  advances  that  may
   have  been  made by the Members to the Company, in  the  order  of
   priority as provided by law;

         (b)   To  the establishment of any reserves deemed necessary
   by  the  Managing Member or the person winding up the  affairs  of
   the  Company for any contingent liabilities or obligations of  the
   Company;

         (c)   To  the  repayment of any unsecured loans or  advances
   that  may  have  been made by any Members to the  Company  in  the
   order of priority as provided by law;

         (d)   Any  remaining  balance will  be  distributed  to  the
   Members  pro rata based on each Member's positive capital  account
   balance,  after giving effect to allocations pursuant to  Sections
   5.1  and  5.3  and  after taking into account all capital  account
   adjustments  for the Company taxable year during which liquidation
   occurs (other than those made pursuant to this Section 12.3(d)).

XIII.     MISCELLANEOUS PROVISIONS

13.1 INTERPRETATION. The terms and provisions of this agreement shall
be governed by and construed in accordance with the laws of the State
of  Delaware. All references herein to Articles and Sections refer to
Articles  and  Sections of this agreement. All  Article  and  Section
headings  are  for reference purposes only and shall not  affect  the
interpretation  of  this agreement. The use of the masculine  gender,
for  all purposes of this agreement, shall be deemed to refer to both
male and female Members.

13.2 NOTICE. Any notice given in connection with the business of  the
Company  shall  be duly given if mailed, by certified  or  registered
mail, postage prepaid: if to the Company, to the principal office  of
the  Company set forth in Section 1.3 or to such other address as the
Company may hereafter designate by notice to the Members; if  to  the
Managing  Member or the Special Managing Member, to the  address  set

                       A-27

forth  in Section 1.3 or such other address as such Managing  Members
may  hereafter designate by notice to the Company; if to the  Limited
Members,  to  the  addresses set forth in the subscription  agreement
executed  by  each Limited Member or to such other  address  as  such
Limited Members may hereafter designate by notice to the Company.

13.3  SUCCESSORS AND ASSIGNS. Except as herein otherwise provided  to
the  contrary, this agreement shall be binding upon and inure to  the
benefit  of  the  parties hereto and their personal  representatives,
assigns and successors.

13.4   COUNTERPARTS.  This  agreement  may  be  executed  in  several
counterparts,  and  all so executed shall constitute  one  agreement,
binding  upon  all parties hereto, notwithstanding that  all  of  the
parties are not signatory to the original or the same counterpart.

13.5  SEVERABILITY. In the event that any provision of this agreement
shall  be  held to be invalid, the same shall not affect the validity
of  the  remainder of this agreement or the validity or the formation
of  the  Company  as  a limited Company under the  Limited  Liability
Company Act.

      IN  WITNESS WHEREOF, this agreement has been executed as of the
       day of          ,     .


LIMITED MEMBERS                         MANAGING MEMBERS

By AEI Fund Management XXI, Inc.,       AEI Fund Management XXI, Inc.
   attorney-in-fact                     Managing Member



By
 Robert P. Johnson, President            Robert P. Johnson, President



                                         Robert P. Johnson,
                                         Special Managing Member

                       A-28

                        EXHIBIT B



                  PRIOR PERFORMANCE TABLES


   The information presented in the following tables updates
the  tables  represents the  historical  experience  of  all
public  real  estate  programs organized by  our managers or
their affiliates  during  the periods  indicated. You should
not assume that AEI Fund 26 will  generate  results, or that
you  will  receive   benefits,  comparable  to  the  results
generated by, or benefits received  by  investors  in, these
prior real estate programs.  You will have  no  interest  in
the  assets  or  operations  of  our managers.

   We  have  filed  a registration statement  that  contains
additional  information  about  the  performance  of   prior
programs  in  "Part  II".  You can  obtain  a  copy  of  the
registration statement by contacting Mr. Robert P.  Johnson,
President,  AEI Fund Management XXI, Inc., 1300 Wells  Fargo
Place, 30 East Seventh Street, Saint Paul, Minnesota 55101.

   The  programs  included  in  the  following  tables  have
investment  objectives  similar to those  of  AEI  Fund  26,
including  protection of capital, distribution of  partially
"tax  sheltered"  cash  flow from  operations,  and  capital
appreciation.

  Table              Index Description               Page

     I     Experience in Raising and Investing Funds   B-2
    II     Compensation to Sponsors                    B-3
   III     Operating Results of Prior  Programs        B-4
    IV     Results of Completed Programs               B-7
    V      Sales or Disposals of Properties            B-8

                                B-1


                                TABLE I

                 EXPERIENCE IN RAISING AND INVESTING FUNDS
                                (Unaudited)

   The following table provides information at December 31, 2004, as to the
experience  of  the Managing Members and their Affiliates  in  raising  and
investing  funds with respect to all prior public programs  closed  in  the
last five years.


                                 AEI           AEI            AEI
                               Income &      Income &       Income &
                                Growth        Growth         Growth
                               Fund 23       Fund 24        Fund 25

Dollar Amount Offered        $24,000,000    $50,000,000   $50,000,000
Dollar Amount Raised         $13,349,321    $24,831,283   $29,591,879
Percentage of Amount
 Raised                            100.0%         100.0%        100.0%
Less Offering Expenses:
 Selling Commissions
  and Discount                      10.0           10.0          10.0
 Organizational
  Expenses                           5.0            4.8           4.7
 Other (a)                           2.6            0.0           0.0
 Less Reserves                       0.4            0.2            .1
                              -----------    -----------   -----------
Percent Available
 for Investment                     82.0%          85.0%         85.2%
                              ===========    ===========   ===========
Acquisition Costs:
 Prepaid Items and
  Fees Related
  to Purchase of
  Property                           0.0%           0.0%          0.0%
 Investment in
  Properties (b)                    82.0           85.0          34.4(c)
 Acquisition Fees                    0.0            0.0           0.0
                              -----------    -----------   -----------
Total Acquisition Cost              82.0%          85.0%         34.4%
                              ===========    ===========   ===========

Percent Leverage                     0.0%           0.0%          0.0%
Date Offering Began               Mar. 99         May 01       May 03
Length of Offering
 (months)                              24             24          (d)
Months to Invest 90% of
 Amount Available for
 Investment (measured
 from beginning of
 offering)                            28             31           (c)




(a)   Represents distributions in excess of net cash flow (return  of
      capital).
(b)   Includes  cash down payments and capitalized costs and expenses
      related to  the  purchase  of  properties,  including the  cost
      of  appraisals,   attorney's   fees,  expenses  of personnel in
      investigating  properties,   and  overhead  allocated  to  such
      activities.
(c)   Acquisitions are in progress.
(d)   Represents subscriptions  accepted  through  December 31, 2004.
      Offering had not closed as of December 31, 2004.
                                B-2

                                 TABLE II

                         COMPENSATION TO SPONSORS
                                (Unaudited)

    The following table provides information as to the compensation paid to
the  Managing  Member  and  their Affiliates  during the period from  March
1999  to December 31, 2004 for all prior public programs closed in the last
five years.


                                         AEI          AEI            AEI
                                       Income &     Income &       Income &
                                        Growth       Growth         Growth
                                      Fund 23       Fund 24        Fund 25
Type of Compensation
Date Offering Commenced                 Mar. 99        May 01        May 03
Dollar Amount Raised                $13,349,321   $24,831,283   $29,591,879
Amount Paid to Sponsors
 From Proceeds of Offering:
   Underwriting Fees (a)                271,147       691,268       852,129
   Acquisition Expenses
    - purchase option on property             0             0             0
    - real estate commission                  0             0             0
    - expense reimbursement              92,688(c)    158,363(c)    102,747(c)
   Organization Offering Expenses       206,858       668,967       897,682
Dollar Amount of Cash
 Generated From
 Operations Before
 Deducting Payments
   to Sponsors                        4,218,871     3,361,067       825,996
Amount Paid to Sponsors
 From Operations:
   Property Management
    Fees (b)                                  0             0             0
   Partnership
    Management Fees (b)                       0             0             0
   Reimbursements (b)                   798,544       605,899       166,433
   Leasing Commissions                        0             0             0
   Participation in Cash Distributions   99,599        83,629        22,124
Dollar Amount of Property
 Sales and Refinancing
 Before Deducting
 Payments to Sponsors:
   - cash                             6,047,165     3,743,988             0
   - notes                                    0             0             0
Amount Paid to Sponsors
 From Property Sales
 and Refinancing:
   Real Estate
    Commissions (d)                           0             0             0
   Incentive Fees (d)                         0             0             0
   Reimbursements (d)                   188,820        79,333             0
   Participation in Cash Distributions    8,735         6,144             0

(a)  Does  not  include  fees paid to AEI Securities,  Inc.  which  were
     reallowed to participating dealers.
(b)  Although  not  paid  a  fixed  fee  for  property  management  and
     partnership   management,  the  Managing Members   and  Affiliates
     were reimbursed at their Cost for the provision  of such services.
     Such reimbursements are reflected  under the line   item  "Amount
     Paid  to  Sponsors From Operations-Reimbursements."
(c)  The  Programs  received  reimbursements  from  the  sellers and/or
     lessees in the form of financing fees, commitment fees and expense
     reimbursements to offset these costs.  The reimbursements received
     by Fund 23, Fund   24  and Fund 25 totaled  $266,621, $252,187 and
     $66,880, respectively.
(d)  Although  not  paid a fixed fee from property  sales,  the Managing
     Members   and   Affiliates  were  reimbursed  at their Cost for the
     provision  of   services   related   to   property   sales.    Such
     reimbursements   are  reflected  under  the  line item "Amount Paid
     to Sponsors  From  Property Sales and Refinancing - Reimbursements."

                                B-3
                                 TABLE III

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)

The following table provides information as to the results of all prior
programs closed in the past five years for each year of the five years (or
from inception if formed after January 1, 2000) ended December 31, 2004.



                                                   AEI INCOME & GROWTH FUND 23
                                                       Years Ended December 31

                                                2000        2001         2002         2003         2004
                                                                                
Gross Revenues from Operations              $  432,076   $ 1,039,824  $ 1,063,481  $   880,585  $  943,673
Profit  on Sale of Properties                        0             0      362,730    1,079,117           0
Less:
  Operating Expenses                           165,308       213,395      168,324      174,563     183,937
  Depreciation                                  17,427       204,430      267,495      175,111     151,844
   Real  Estate  Impairment                          0             0            0    1,600,393           0
                                             ----------   -----------  -----------  -----------  -----------
Net  Income (Loss) - GAAP Basis             $  249,341   $   621,999  $   990,392  $     9,635  $  607,892
                                             ==========   ===========  ===========  ===========  ===========
Taxable Income:
  -from  operations                         $  322,431   $   627,673  $   641,442  $   547,981  $   498,390
  -from  gain on sale                                0             0      344,446    1,051,952            0
                                             ==========   ===========  ===========  ===========  ===========

Cash Generated (Deficiency) From Operations $  338,558   $   698,009  $   939,872  $   697,744  $   791,251
Cash Generated From Sales                            0             0    2,178,700    3,679,645            0
Cash  Generated  From  Refinancing                   0             0            0            0            0
                                             ----------   -----------  -----------  -----------  -----------
Cash Generated From Operations,
  Sales  and Refinancing                       338,558       698,009    3,118,572    4,377,389      791,251
Less: Cash Distributions to Investors
  -from  operating cash flow                   323,653       698,009      873,962      697,744      347,113
  -from  sales and refinancing                       0             0       97,727      292,929      482,860
  -from  cash reserves (a)                           0       145,109            0       63,085            0
                                             ----------   -----------  -----------  -----------  -----------
Cash Generated (Deficiency)
   After   Cash  Distributions                  14,905      (145,109)   2,146,883    3,323,631      (38,722)
Less: Special Items (Not Including
   Sales  and  Refinancing)                          0             0            0            0            0
                                             ----------   -----------  -----------  -----------  -----------
Cash Generated (Deficiency)
 After Cash Distributions and
 Special Items                              $   14,905   $  (145,109) $ 2,146,883  $ 3,323,631      (38,722)
                                             ==========   ===========  ===========  ===========  ===========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
       -from  operations                            51            48           47           40           36
       -from  recapture                              0             0            5            4            0
    Capital  Gain  (Loss)                            0             0           19           74            0
  Cash Distributions to Investors:
   Source (on GAAP basis)
       -Investment  Income                          39            47           71            1           44
       -Return  of  Capital                         12            17            0           77           17
  Cash Distributions to Investors:
   Source (on cash basis)
       -Sales                                        0             0            7           22           36
       -Refinancing                                  0             0            0            0            0
       -Operations                                  51            53           64           51           25
       -Cash  Reserves  (a)                          0            11            0            5            0
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                                                                 100%

(a)  Represents initial capital or cash retained from
     prior years' cash flow.
(b)  Based on an investment of a weighted average Unit
     outstanding.
                        B-4
                           TABLE III (Continued)

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)


                                              AEI INCOME & GROWTH FUND 24
                                               Years  Ended December  31

                                                2001        2002       2003      2004
                                                                    
Gross  Revenues from Operations             $   50,013  $  537,720  $ 1,436,722  $ 1,700,553
Profit on Sale of Properties                         0           0      703,102      130,829
Less:
 Operating Expenses                             22,087     164,203      244,633      538,918
 Depreciation                                    8,886     101,688      336,661      465,163
 Real Estate Impairment                              0           0            0      434,065
                                             ----------  ----------  -----------  -----------
Net Income (Loss) - GAAP Basis              $   19,040  $  271,829  $ 1,558,530  $   393,236
                                             ==========  ==========  ===========  ===========
Taxable Income (Loss):
 -from  operations                          $   31,873  $  290,954  $   938,856  $ 1,163,904
 -from gain on sale                                  0           0      661,553      121,430
                                             ==========  ==========  ===========  ===========

Cash Generated (Deficiency) From Operations $  112,098  $  364,271  $ 1,208,879  $ 1,086,520
Cash Generated From Sales                            0           0    3,155,310      509,345
Cash Generated From Refinancing                      0           0            0            0
                                             ----------  ----------  -----------  -----------
Cash Generated From Operations,
  Sales  and Refinancing                       112,098     364,271    4,364,189    1,595,865
Less: Cash Distributions to Investors
 -from operating cash flow                           0     267,186      694,545    1,086,520
 -from sales and refinancing                         0           0      281,111      333,333
 -from cash reserves (a)                             0           0            0      360,452
                                             ----------  ----------  -----------  -----------
Cash Generated (Deficiency)
  After  Cash Distributions                    112,098      97,085    3,388,533     (184,440)
Less: Special Items (Not Including
 Sales and Refinancing)                              0           0            0            0
                                             ----------  ----------  -----------  -----------
Cash Generated (Deficiency)
 After Cash Distributions and
  Special  Items                            $  112,098  $   97,085  $ 3,388,533  $  (184,440)
                                             ==========  ==========  ==========   ===========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
     -from operations                               14          31           42           45
     -from recapture                                 0           0            9            0
   Capital Gain (Loss)                               0           0           21            5
  Cash Distributions to Investors:
   Source (on GAAP basis)
     -Investment Income                              0          29           44           14
     -Return of Capital                              0           0            0           55
  Cash Distributions to Investors:
   Source (on cash basis)
     -Sales                                          0           0           13           13
     -Refinancing                                    0           0            0            0
     -Operations                                     0          29           31           42
     -Cash Reserves (a)                              0           0            0           14
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                                                   100%

(a) Represents initial capital or cash retained from
    prior years' cash flow.
(b) Based on an investment of a weighted average Unit
    outstanding.

                           B-5

                           TABLE III (Continued)

                    OPERATING RESULTS OF PRIOR PROGRAMS
                                (Unaudited)


                                           AEI INCOME & GROWTH FUND 25
                                            Years  Ended December  31

                                                  2003           2004
                                                     
Gross  Revenues from Operations                $  66,069     $  773,695
Profit on Sale of Properties                           0              0
Less:
 Operating Expenses                               18,772        161,429
 Depreciation                                      4,108        189,655
 Real Estate Impairment                                0              0
                                                ---------      ---------
Net Income (Loss) - GAAP Basis                 $  43,189      $ 422,611
                                                =========      =========
Taxable Income (Loss):
 -from  operations                             $  54,486      $ 469,399
 -from gain on sale                                    0              0
                                                =========      =========

Cash Generated (Deficiency) From Operations    $  93,292      $ 733,149
Cash Generated From Sales                              0              0
Cash Generated From Refinancing                        0              0
                                                ---------      ---------
Cash Generated From Operations,
  Sales  and Refinancing                          93,292        733,149
Less: Cash Distributions to Investors
 -from operating cash flow                         5,135        463,742
 -from sales and refinancing                           0              0
 -from cash reserves (a)                               0              0
                                                ---------      ---------
Cash Generated (Deficiency)
  After  Cash Distributions                       88,157        269,407
Less: Special Items (Not Including
 Sales and Refinancing)                                0              0
                                                ---------      ---------
Cash Generated (Deficiency)
 After Cash Distributions and
  Special  Items                               $  88,157      $ 269,407
                                                =========      =========
Tax and Distribution Data
 Per $1,000 Invested (b)
  Federal Income Tax Results:
   Ordinary Income (Loss)
     -from operations                                 12             29
     -from recapture                                   0              0
   Capital Gain (Loss)                                 0              0
  Cash Distributions to Investors:
   Source (on GAAP basis)
     -Investment Income                                1             26
     -Return of Capital                                0              3
  Cash Distributions to Investors:
   Source (on cash basis)
     -Sales                                            0              0
     -Refinancing                                      0              0
     -Operations                                       1             29
     -Cash Reserves (a)                                0              0
Amount (in percentage terms) remaining
 invested in program properties at the
 end of the last period reported in the
 Table                                                              100%

(a) Represents initial capital or cash retained from
    prior years' cash flow.
(b) Based on an investment of a weighted average Unit
    outstanding.

                           B-6



                                 TABLE IV

                       RESULTS OF COMPLETED PROGRAMS
                                (Unaudited)

     The following table provides the results of all programs that
have completed operations (no longer hold properties) within the five
years ended December 31, 2004.


                             Net Lease
                             Income &     AEI Real     AEI Real     AEI Real
                             Growth        Estate       Estate       Estate
                             Fund 84-A(a) Fund 85-A(b) Fund 86-A(c) Fund XVI(d)

Dollar Amount Raised         $5,000,000    $7,500,000  $7,500,000  $15,000,000
Number of Properties Purchased        8            15          11           24
Date of Closing of Offering     Dec. 84       Jun. 85     Jul. 86      Nov. 87
Date of First Sale of Property  Mar. 96       Sep. 93     Aug. 89      Aug. 89
Date of Final Sale of Property  Feb. 01       Aug. 03     Jun. 04      May  04
Tax and Distribution Data Per
 $1,000 Investment:
Federal Income Tax Results:
 Ordinary Income (Loss)
  -from operations                  747           792         771          617
  -from recapture                    10            49           5           20
 Capital Gain (Loss)                449           500         296          132
 Deferred Gain
  Capital                             0             0           0            0
  Ordinary                            0             0           0            0
Cash Distributions to Investors
 Source (on GAAP basis)
  -Investment Income              1,265         1,146         990          786
  -Return of Capital                924         1,068         943          854
 Source (on cash basis)
  -Sales                          1,035         1,059         925          829
  -Refinancing                        0             0           0            0
  -Operations                     1,154         1,155       1,008          811
  -Other                              0             0           0            0


(a)Final sale of property was completed February 1, 2001.
(b)Final sale of property was completed August 15, 2003.
(c)Final sale of property was completed June 1, 2004.
(d)Final sale of property was completed May 25, 2004.

                                B-7

                                     TABLE V

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)

      The following table provides information with respect to sales or disposals
of property by prior programs during the three years ended December 31, 2004.


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     

AEI Income &    Champps
Growth Fund XXI Schaumburg IL(b) Dec.97 Feb.02    54,266    0           0       0      54,266   0     41,954       41,954    19,378

AEI Income &    Denny's
Growth Fund XXI Covington LA     Mar.97 Feb.02   816,142    0           0       0     816,142   0  1,304,948    1,304,948   601,361

AEI Real Estate Johnny Carino's
Fund 85-A       Austin TX(c)     Sep.01 May 02   857,972    0           0       0     857,972   0    749,587      749,587    70,248

AEI Income &    Johnny Carino's
Growth Fund 23  Austin TX(c)     Sep.01 May 02   567,176    0           0       0     567,176   0    501,879      501,879    47,598

AEI Real Estate Hops Grill & Bar
Fund 85-A       Palm Harbor FL   Mar.86 Jun.02 1,062,953    0           0       0   1,062,953   0  1,094,373    1,094,373 1,241,674

AEI Real        Children's World
Estate          West
Fund 85-A       Bridgewater MA(b)Oct 01 Jun 02   106,530    0           0       0     106,530   0     89,285       89,285     5,565

AEI Real Estate Applebee's
Fund XVI        Victoria TX      Mar.96 Jul.02   673,665    0           0       0     673,665   0  1,335,555    1,335,555   578,445

AEI Real Estate Rally's
Fund XVIII      San Antonio TX   Dec.92 Jul.02         0    0           0       0           0   0    308,997      308,997   140,958

AEI Real Estate Children's World       Apr. 02 to
Fund 85-A       Plainfield IL(c) May 01 Jul.02   360,564    0           0       0     360,564   0    294,542      294,542    26,092

AEI Net Lease   Applebee's
I&G Fund XIX    Beaverton OR     Dec.93 Aug 02 3,156,082    0           0       0   3,156,082   0  1,760,079    1,760,079 2,040,066

                        B-8

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Real Estate Champps
Fund XVIII      Columbus OH(b)   Aug.96 Aug.02   164,858    0           0       0     164,858   0    115,627      115,627    78,136

AEI Net Lease   Johnny Carino's        May 02 to
I&G Fund XX     Austin TX(c)     Sep.01 Aug.02   506,007    0           0       0     506,007   0    454,305      454,305    51,879

AEI Income &    Johnny Carino's
Growth Fund XXI Austin TX(c)     Sep.01 Aug.02   603,681    0           0       0     603,681   0    544,819      544,819    66,428

AEI Real Estate Tractor Supply
Fund XV         Maryville TN(b)  Feb.96 Sep.02   147,133    0           0       0     147,133   0    110,276      110,276    74,832

AEI Real Estate TGI Friday's           Jun.02 to
Fund XVII       Greensburg PA(c) Dec.97 Sep.02 1,223,603    0           0       0   1,223,603   0  1,009,045    1,009,045   488,875

AEI Income &    TGI Friday's           Aug.02 to
Growth Fund XXIIGreensburg  PA(c)Dec.97 Sep.02   789,247    0           0       0     789,247   0    653,563      653,563   308,347

AEI Income &    Children's World       Sep.02 to
Growth Fund XXIIPlainfield IL(c) May 01 Oct.02   230,243    0           0       0     230,243   0    188,152      188,152    23,791

AEI Real Estate Marie Callender's      Jan.02 to
Fund 85-A       Gresham OR(c)    Sep.99 Oct.02   914,707    0           0       0     914,707   0    813,982      813,982   201,529

AEI Income &    Children's World
Growth Fund XXIIGolden CO(c)     Sep.00 Oct.02    41,925    0           0       0      41,925   0     33,119       33,119     6,601

AEI Income &    Hollywood Video        Jul.02 to
Growth Fund XXIISaraland AL(c)   Jan.99 Oct.02   896,350    0           0       0     896,350   0    846,185      846,185   277,442

AEI Real Estate All Tune & Lube
Fund 85-B     Merrillville IN    Oct.86 Oct.02   238,879    0           0       0     238,879   0    304,432      304,432   488,046

                        B-9

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Real Estate Auto Max
Fund 86-A       Coon Rapids MN   Jul.87 Oct.02   638,523    0           0       0     638,523   0    795,818      795,818 1,259,517

AEI Real Estate Denny's
Fund 85-B       Ft. Worth TX     Oct.86 Nov.02   582,182    0           0       0     582,182   0    981,764      981,764   998,808

AEI Real Estate Auto Max
Fund 86-A       Bloomington MN   Jun.87 Nov.02   789,374    0           0       0     789,374   0    838,749      838,749 1,679,011

AEI Income &    Champps                Mar.02 to
Growth Fund XXI Livonia MI(c)    May 98 Nov.02 4,134,997    0           0       0   4,134,997   0  3,092,903    3,092,903 1,379,697

AEI Real Estate Jack-in-the-Box
Fund 85-A       Ft. Worth TX     Dec.85 Dec.02   897,165    0           0        0    897,165   0  1,005,586    1,005,586 2,408,044

AEI Net Lease   Children's World
I&G Fund XX     New Albany OH(d) Mar.01 Dec.02   685,831    0           0        0    685,831   0    540,366      540,366    88,093

AEI Income &    Children's World
Growth Fund 23  New Albany OH(d) Mar.01 Dec.02   587,854    0           0        0    587,854   0    465,163      465,163    75,507

AEI Real Estate Fuddrucker's           Nov.02 to
Fund XVIII      Thornton CO(c)   Jul.97 Dec.02 1,274,700    0           0        0  1,274,700   0    904,176      904,176   520,317

AEI Net Lease   Champps                Feb.02 to
I&G Fund XX     Schaumburg IL(c) Dec.97 Dec.02 2,218,837    0           0        0  2,218,837   0  1,669,074    1,669,074   825,986

AEI Real Estate Denny's
Fund XVII       Casa Grande AZ   Mar.89 Dec.02 1,090,781    0           0        0  1,090,781   0    721,420      721,420 1,245,355

AEI Net Lease   Denny's
I&G Fund XX     Burleson TX      Dec.94 Dec.02   810,000    0           0        0    810,000   0    923,480      923,480   627,636

                        B-10

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Net Lease   Denny's
I&G Fund XX     Grapevine TX     Nov.95 Dec.02   958,166    0           0        0    958,166   0  1,354,721    1,354,721   749,496

AEI Income &    Arby's                Aug.02 to
Growth Fund 23  Coon Rapids MN(c)Aug.01 Dec.02 1,023,670    0           0        0  1,023,670   0    907,056      907,056    99,130

AEI Net Lease   Champps                Sep.02to
I&G Fund XX     Lyndhurst OH(c)  Apr.96 Dec.02 3,390,504    0           0        0  3,390,504   0  2,307,711    2,307,711 1,640,745

AEI Net Lease   Champps
I&G Fund XX     Columbus OH(c)   Apr.99 Dec.02   518,443    0           0        0    518,443   0    399,177      399,177   156,315

AEI Real Estate Fuddruckers
Fund XVIII      Thornton CO(c)   Jul.97 Jan.03   714,327    0           0        0    714,327   0    490,902      490,902   290,624

AEI Income &    Children's World
Growth Fund XXIIPlainfield IL(b) May 01 Jan.03   220,430    0           0        0    220,430   0    175,379      175,379    27,740

AEI Net Lease   Champps                Jan.03 to
I&G Fund XX     Columbus OH(c)   Apr.99 Feb.03 1,034,237    0           0        0  1,034,237   0    778,366      778,366   312,896

AEI Real Estate Marie Callender's
Fund 85-A       Gresham OR(b)    Sep.99 Feb.03   231,683    0           0        0    231,683   0    201,792      201,792    62,566

AEI Real Estate Cheddar's
Fund 85-B       Ft. Wayne IN     Dec.86 Feb.03 1,540,416    0           0        0  1,540,416   0  1,480,553    1,480,553 3,076,004

AEI Real Estate Champps                Jan.03 to
Fund XV         Troy, MI(c)      Sep.98 Feb.03 1,776,832    0           0        0  1,776,832   0  1,330,265    1,330,265   623,782

AEI Real Estate Children's World
Fund XV         West Chester OH  Jul.99 Mar.03 1,223,310    0           0        0  1,223,310   0    999,162      999,162   333,443

                        B-11

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Real Estate Jemcare
Fund XV         Haltom City TX   Apr.87 Mar.03   247,219    0           0        0    247,219   0    417,213      417,213   536,704

AEI Real Estate Jemcare
Fund XVI        Arlington TX     Dec.87 Mar.03   172,822    0           0        0    172,822   0    450,475      450,475   618,687

AEI Real Estate Jemcare
Fund XVI        Arlington TX     Dec.87 Mar.03   321,970    0           0        0    321,970   0    603,641      603,641   659,127

AEI Income &    Johnny Carino's        Jan.03 to
Growth Fund 23  Victoria TX(c)   Dec.00 Mar.03 2,161,939    0           0        0  2,161,939   0  1,656,473    1,656,473   388,865

AEI Real Estate Arby's
Fund 85-A       Hudsonville MI(b)Sep.99 Mar.03    10,027    0           0        0     10,027   0     11,358       11,358     3,544

AEI Net Lease   Party City
I&G Fund XIX    Gainesville GA   Dec.97 Mar.03 1,711,879    0           0        0  1,711,879   0  1,435,309    1,435,309   811,813

AEI Real        Lake Michigan
Estate          Credit Union
Fund XVI        Wyoming MI       May 87 Mar.03   399,184    0           0        0    399,184   0    626,240      626,240   484,153

AEI Real Estate Children's World       Feb.03 to
Fund XVIII      Phoenix AZ(c)    Sep.89 Mar.03 1,592,169    0           0        0  1,592,169   0    883,486      883,486 1,415,857

AEI Real Estate Champps                Feb.03 to
Fund XVII       Troy MI(c)       Sep.98 Apr.03 1,753,563    0           0        0  1,753,563   0  1,289,135    1,289,135   635,825

AEI Net Lease   Applebee's
I&G Fund XX     Brownsville TX   Aug.95 Apr.03   730,292    0           0        0    730,292   0  1,378,736    1,378,736 1,076,990

AEI Real Estate Champps
Fund XVIII      Troy MI(c)       Sep.98 Apr.03 1,657,062    0           0        0  1,657,062   0  1,192,496    1,192,496   594,132

                        B-12

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Net Lease   Champps                Apr.03 to
I&G Fund XIX    Troy MI(c)       Sep.98 May 03 1,612,362    0           0        0  1,612,362   0  1,180,397    1,180,397   598,025

AEI Income &    Children's World       Apr.03 to
Growth FundXXII Houston TX(c)    Jul.99 May 03 1,056,594    0           0        0  1,056,594   0    892,219      892,219   291,524

AEI Income &    Champps
Growth Fund XXIICenterville OH(c)Jan.99 May 03 1,314,145    0           0        0  1,314,145   0    924,843      924,843   441,861

AEI Real Estate Tumbleweed
Fund XVIII      Columbus OH(b)   Dec.98 May 03   704,001    0           0        0    704,001   0    554,269      554,269   279,694

AEI Real Estate Rio Bravo
Fund 85-A       St. Paul MN(b)   Dec.85 May 03    91,744    0           0        0     91,744   0    135,265      135,265   240,698

AEI Real Estate Denny's
Fund XV         Greenville TX    Jan.96 May 03   467,789    0           0        0    467,789   0  1,028,432    1,028,432   581,245

AEI Real Estate Champps                May 03 to
Fund XVII       Centerville OH(c)Jan.99 Jun.03   782,545     0           0        0    782,545   0    551,677      551,677  258,926

AEI Income &    Children's World
Growth Fund XXI Mundelein IL(c)  Mar.01 Jul.03 2,010,839     0           0        0  2,010,839   0  1,618,824    1,618,824  332,834

AEI Income &    Arby's
Growth Fund XXIIHomewood AL(c)   Jul.99 Jul.03 1,562,751      0           0        0  1,562,751   0 1,384,408   1,384,408   425,701

AEI Real Estate Arby's
Fund XVI        Grand Rapids MI  May.87 Jul.03   256,443      0           0        0    256,443   0   652,880     652,880   544,100

AEI Net Lease   Denny's
I&G Fund XIX    Apple Valley CA  May 94 Jul.03   947,709      0     128,750        0  1,076,459   0 1,177,655   1,177,655 1,510,313
                        B-13

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Net Lease   Tumbleweed             May 03 to
I&G Fund XIX    Columbus OH(c)   Dec.98 Jul.03 1,038,773    0           0        0  1,038,773   0    823,496      823,496   378,357

AEI Real Estate Champps                Jun.03 to
Fund XVIII      Centerville OH(c)Jan.99 Jul.03 2,126,740    0           0        0  2,126,740   0  1,502,252    1,502,252   718,764

AEI Real Estate Taco Cabana
Fund 86-A       Houston TX(e)    Jul.91 Jul.03 1,090,031    0           0        0  1,090,031   0    859,159      859,159 1,512,353

AEI Net Lease   Taco Cabana
I&G Fund XIX    Houston TX(e)    Jul.91 Jul.03   674,797    0           0        0    674,797   0    547,322      547,322   936,432

AEI Real Estate Taco Cabana
Fund XVII       San Marcos TX    Nov.88 Jul.03 1,333,145    0           0        0  1,333,145   0  1,013,505    1,013,505 2,218,543

AEI Real Estate Creative Years
Fund XVI        Houston TX       Apr.87 Aug.03   228,440    0           0        0    228,440   0    483,128      483,128   653,525

AEI Real        Children's World
Estate          West                   Jan.03 to
Fund 85-A       Bridgewater MA(c)Oct.01 Aug.03 1,217,325    0           0        0  1,217,325   0    969,605      969,605   147,470

AEI Real Estate Cheddar's
Fund XVI        IndianapolisIN(f)Feb.88 Aug.03   406,892    0           0        0    406,892   0    750,714      750,714   808,513

AEI Real Estate Cheddar's
Fund XVII       IndianapolisIN(f)Feb.88 Aug.03   406,892    0           0        0    406,892   0    774,077      774,077   809,194

AEI Income &    Champps                Jul.03 to
Growth Fund XXI Centerville OH(c)Jan.99 Aug.03 1,384,939    0           0        0  1,384,939   0    984,426      984,426   484,595

AEI Real Estate Fuddruckers
Fund XVI        Omaha NE         Nov.87 Aug.03 1,860,767    0           0        0  1,860,767   0  1,151,543    1,151,543 2,424,903

                        B-14

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                     
AEI Income &    Johnny Carino's        Jul.03 to
Growth Fund 23  San Antonio TX(c)Nov.01 Sep.03 1,517,706    0           0        0  1,517,706   0  1,105,231    1,105,231   232,490

AEI Net Lease   Johnny Carino's        May 03 to
I&G Fund XIX    San Antonio TX(c)Nov.01 Oct.03 1,651,078    0           0        0  1,651,078   0  1,194,932    1,194,932   245,604

AEI Net Lease   Garden Ridge           Sep.03 to
I&G Fund XX     Pineville NC(c)  Mar.96 Oct.03 1,973,128    0           0        0  1,973,128   0  1,667,092    1,667,092 1,341,477

AEI Net Lease   Applebee's
I&G Fund XIX    CrestviewHillsKY(b)Jun.93 Oct.03  23,207    0           0        0     23,207   0     14,039       14,039    20,121

AEI Income &    Garden Ridge           Nov.03 to
Growth Fund XXI Pineville NC(c)  Mar.96 Dec.03 3,968,116    0           0        0  3,968,116   0  3,310,163    3,310,163 2,751,908

AEI Real Estate Garden Ridge
Fund XV         Woodlands TX(c)  Aug.03 Dec.03 2,032,178    0           0        0  2,032,178   0  1,746,370    1,746,370    61,586

AEI Real Estate Johnny Carino's
Fund XV         Pharr TX(b)      Sep.03 Dec.03   275,548    0           0        0    275,548   0    216,515     216,515      9,786

AEI Net Lease   Garden Ridge           Feb.03 to
I&G Fund XIX    Pineville NC(c)  Mar.96 Dec.03 4,381,044    0           0        0  4,381,044   0  3,615,378   3,615,378  2,964,657

AEI Income &    Hollywood Video
Growth          Muscle Shoals          Nov.03 to
Fund XXII       AL(c)            Aug.99 Dec.03   871,473    0           0        0    871,473   0    761,257     761,257    304,816

AEI Income &    Winn-Dixie
Growth Fund XXI Panama City FL(b)Sep.03 Dec.03    26,607    0           0        0     26,607   0     24,162      24,162        464

AEI Income &    Winn-Dixie
Growth Fund 24  Panama City FL(c)Sep.03 Dec.03 1,410,400    0           0        0  1,410,400   0  1,203,610   1,203,610     22,736

                        B-15

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Income &    Children's World
Growth          Round Lake Beach       Oct.03 to
Fund 24         IL(c)            Nov.01 Dec.03 1,744,910    0           0        0  1,744,910   0  1,342,850   1,342,850    278,210

AEI Real Estate Cheddar's
Fund XVIII      Clive, IA        Jan.91 Jan.04 2,131,025    0           0        0  2,131,025   0  1,392,249   1,392,249  2,607,617

AEI Real Estate Johnny Carino's
Fund XV         Pharr, TX(c)     Sep.03 Jan.04 2,274,068    0           0        0  2,274,068   0  1,780,398   1,780,398     90,415

AEI Income &    Hollywood Video
Growth          Muscle Shoals,
Fund XXII       AL(c)            Aug.99 Jan.04   668,266    0           0        0    668,266   0    579,370     579,370    236,858

AEI Income &    Winn-Dixie
Growth Fund XXI Panama City,FL(c)Sep.03 Jan.04   874,236    0           0        0    874,236   0    745,138     745,138     16,947

AEI Income &    Garden Ridge
Growth Fund XXI Pineville, NC(b) Mar.96 Jan.04   392,836    0           0        0    392,836   0    334,228     334,228    281,487

AEI Income &    Tia's Tex-Mex
Growth          Killeen,               Jan.04 to
Fund XXII       TX(c)            Dec.03 Feb.04 1,330,280    0           0        0  1,330,280   0  1,041,935   1,041,935     15,134

AEI Income &    Children's World
Growth          Round Lake Beach,      Jan.04 to
Fund 24         IL(c)            Nov.1  Feb.04   509,345    0           0        0    509,345   0    405,299     405,299     91,857

AEI Real Estate Jiffy Lube
Fund XVI        Dallas, TX(f)    Dec.87 Feb.04    80,825    0           0        0     80,825   0    154,892     154,892    329,678

AEI Real Estate Jiffy Lube
Fund XVII       Dallas, TX(f)    Mar.88 Feb.04   242,485    0           0        0    242,485   0    454,624     454,624    945,220

                        B-16

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Children's World
Fund XVII       Palatine, IL     Sep.89 Apr.04 1,298,032    0           0        0  1,298,032   0    801,098     801,098  1,350,942

AEI Real Estate Cheddar's
FUnd XVII       Davenport, IA    Nov.91 Apr.04 2,527,592    0           0        0  2,527,592   0  1,530,934   1,530,934  2,874,252

AEI Real        Children's World
Estate          Sterling Heights,
Fund 85-B       MI(g)            Nov.87 May.04   184,008    0           0        0    184,008   0    143,392     143,392    324,762

AEI Real        Children's World
Estate          Sterling Heights,
Fund XVI        MI(g)            Nov.87 May.04   941,543    0           0        0    941,543   0    729,486     729,486  1,669,253

AEI Real Estate Delisi's
Fund 86-A       Brooklyn Park,MN Jun.87 Jun.04   712,331    0           0        0    712,331   0    968,958     968,958  1,049,238

AEI Real        Arby's
Estate          Colorado Springs,
Fund 85-B       Co               Mar.87 Jun.04   138,113    0           0        0    138,113   0    447,176     447,176    615,011

AEI Real Estate Children's World
Fund XVII       Chino, CA        Sep.89 Sep.04 1,631,193    0           0        0  1,631,193   0  1,305,518   1,305,518  2,331,370

AEI Income &    Johnny Carino's
Growth Fund XXI Farmington, NM   May 03 Oct.04 2,893,779    0           0        0  2,893,779   0  2,183,344   2,183,344    360,011

AEI Real Estate Applebee's
Fund XVII       Ashland, OH      Apr.04 Oct.04 2,290,043    0           0        0  2,290,043   0  1,959,272   1,959,272     69,001

AEI Net Lease   Applbee's
I & G Fund XIX  Aurora, CO(b)    Dec.92 Nov.04    77,724    0           0        0     77,724   0     44,782      44,782     75,771
                        B-17

                                     TABLE V (Continued)

                        SALES OR DISPOSALS OF PROPERTIES
                                   (Unaudited)


                                      SELLING PRICE, NET OF CLOSING COSTS                           COSTS OF PROPERTIES, INCLUDING
                                            AND GAAP ADJUSTMENTS                                         CLOSING AND SOFT COSTS

                                                                                                                        Excess of
                                                                                                         Total          Property
                                             Cash                Purchase   Adjustment               Acquisition        Operating
                                            Received               Money    resulting                Cost, Capital        Cash
                                             Net of   Mortgage    Mortgage     from         Original Improvements,      Receipts
                            Date     Date   Closing  Balance at  Taken Back Application     Mortgage  Closing and       Over Expen-
Program         Property  Acquired  of Sale  Costs  Time of Sale by Program  of GAAP  Total Financing Soft Costs  Total ditures(a)
                                                                                 
AEI Real Estate Champps
Fund XVII       Utica, MI(b)     Feb.02 Dec.04   411,252    0           0        0    411,252   0    230,029      230,029    78,416





(a)  Does not include deduction for partnership general and
     administrative expenses not related to the properties.
(b)  Represents the sale of a single tenant-in-common
     property interest to a third party.
(c)  Represents multiple sales of tenant-in-common property
     interest to various third parties during the period
     listed.
(d)  This property was owned jointly by AEI Net Lease Income
     & Growth Fund XX and AEI Income & Growth Fund 23.
(e)  This property was owned jointly by AEI Real Estate Fund
     86-A and AEI Net Lease Income & Growth Fund XIX.
(f)  This property was owned jointly by AEI Real Estate Fund
     XVI and AEI Real Estate Fund XVII.
(g)  This property was owned jointly by AEI Real Estate Fund
     85-B abd AEI Real Estate Fund XVI.

                        B-18




                          EXHIBIT C
               AEI INCOME & GROWTH FUND 26 LLC
                   SUBSCRIPTION AGREEMENT

                (Including Power of Attorney)

 MAKE YOUR CHECK PAYABLE TO "FIDELITY BANK - AEI FUND 26 ESCROW"

(FOR CUSTODIAL ACCOUNTS, CHECKS SHOULD BE MADE PAYABLE TO THE
 CUSTODIAN AND SENT WITH THIS FORM DIRECTLY TO CUSTODIAN.)

  IMPORTANT REPRESENTATIONS ARE MADE ON THIS FORM. PLEASE
  READ CAREFULLY BEFORE SIGNING. PLEASE TYPE OR PRINT.

1. INVESTMENT [ ] Initial Investment [ ] Add-On to Existing Investment

This subscription is in the amount of $______ for the purchase of _____ Units
at $10 per Unit.  Minimum initial investment:  500 Units

[ ] Check the box to elect the deferred commission option.  Must be
    initialled by a qualified representative of the Participating
    Dealer.

[ ] Check the box to waive payment of commission for the sale of units
    to Purchaser through a registerd investment advisor who receives
    compensation on a fee for services basis.

[ ] Check the box if Purchaser is a Registered Investment Advisor or
    Registered Representative of the Participating Dealer investing a NAV.


2. OWNERSHIP   [ ] Tenants in Common   [ ] IRA   [ ] Taxable Trust
               [ ] Uniform Gift to Minors Act of the State of
[ ] Individual [ ] Community Property  [ ] Keogh [ ] Partnership
[ ] Joint Tenants                                [ ] Other (Explain)
[ ] Pension/Profit Sharing Plan        [ ] Non-Taxable Trust [ ] Corporation

3. REGISTERED OWNER  (Name of Qualified Plan, Trust, Partnership or
                      Corporation, if applicable.  Give both names if
                      jointly held. Include acct. no. if coustodial acct.)

               Last Name(s)            First Name(s)        Middle Initial(s)

[ ] Mr.  [ ] Ms.
[ ] Mr.  [ ] Ms.

Mailing Address        Street        City         State      Zip Code    Phone

Residential Address    Street        City         State      Zip Code    Phone

REQUIRED FOR BLUE SKY REGISTRATION REQUIREMENTS FOR ALL ACCOUNT TYPES.

4. QUARTERLY DISTRIBUTIONS                    AUTHORIZATION FOR AUTOMATIC
Please send my distribution checks to the     DEPOSITS (ACH) _ Please
following address (Insert "same" if checks    include a copy of voided check
are to be sent to mailing address.  INSERT    or savings deposit slip.
NAME, ADDRESS, ACCOUNT NUMBER AND PHONE       I authorize AEI Fund Management,
NUMBER IF CHECKS ARE TO BE SENT TO A          Inc., and Fidelity Bank of Edina,
FINANCIAL INSTITUTION.)                       Minnesota, to initiate variable
                                              entries to my checking or savings
                                              account. This authority will
                                              remain in effect until I notify
                                              AEI in writing to cancel in such
Name and complete address:                    time as to afford AEI a
                                              reasonable opportunity to act on
                                              the cancellation.
Phone Number
                                              Financial Institution Name,
                                              Address and Phone Number
                                              (Please Print):



                                             Account Type (Circle One):
                                              Checking   Savings   Other

                                             Account Number:
                                             Office Use Only: Bank Routing No.
                                             Trans. Code

5. DISTRIBUTION REINVESTMENT PLAN (Expires after the offering period;
   Plan election must be re-confirmed annually.)

Note:  The deferred Commission Option is not available with regard to
       additional units purchased as a result of Purchaser's
       participation in the Distribution Reinvestment Plan

Do you elect to participate in the distribution reinvestment plan?[] Yes [] No

(If  you  elect  to  participate by  checking  "Yes,"   rental income  and
other Fund income included in "Net  Cash  Flow" will  not  be  distributed
to you but instead will be  applied to the purchase  of additional  Units,
or fractional Units, at $10.00 per Unit as long as such purchase continues
to  comply   with  applicable  securities  laws  and  the  Fund   has  not
distributed proceeds from sale or refinancing  of properties.)

6. CONSENT TO ELECTRONIC DELIVERY OF REPORTS
We may, at your election, deliver periodic reports of AEI Income & Growth
Fund 26 LLC to you electronically.  If you agree to electronic delivery, you
agree to download these reports from our web site once you have been notified
by e-mail that they have been posted.  You must have an e-mail address to use
this service.  IF YOU ELECT TO RECEIVE THESE REPORTS ELECTRONICALLY, YOU WILL
NOT RECEIVE PAPER COPIES OF THE REPORTS IN THE MAIL, UNLESS YOU LATER REVOKE
YOUR CONSENT.  You may revoke your consent and receive paper copies at any
time by notifying us in writing.

[ ] I wish to receive periodic reports    [ ] I do not wish to receive
    electronically                            periodic reports electronically

       If you agree to accept reports electronically, please complete the
       following enrollment information:

         Name of Investor

         E-Mail Address

         (I understand that I must immediately advise the Fund at the
         address above it my e-mail address changes.)

NOTE:  SIGNATURES AUTHORIZING THIS INVESTMENT MUST APPEAR ON THE REVERSE
       SIDE OF THIS FORM.

                            Please turn over


7.  INVESTOR REPRESENTATIONS  (Each of the following MUST BE INITIALED BY
INVESTOR for this Subscription Agreement to  be accepted)

[ ]  I/we have received a copy  of  the Prospectus  of  AEI Fund  26
     dated       (the "Prospectus")*   and  its  Supplement (if any)
     dated     (Investor must enter   the date of the Supplement, if
     any,  accompanying the Prospectus.  IF THE DATE IS NOT ENTERED,
     THE SUBSCRIPTION AGREEMENT WILL BE RETURNED FOR  COMPLETION.)

[ ]  I/we meet the minimum income and net worth standards set  forth
     in the  Prospectus  under  the  heading "Who May Invest" and am
     purchasing Units for my own account.

[ ]  I/we  hereby make, constitute and appoint the Managing Members,
     or  either  of  them,  with full power of substitution, my true
     and  lawful  attorney  for  the  purposes  and  in  the  manner
     provided  in Section 7.5  of the  Operating  Agreement  of  AEI
     Fund  26,  which   section   of  the  Operating   Agreement  is
     incorporated  herein  by  reference  and  hereby  made  a  part
     hereof.

*Your  broker  is  obligated  to  provide  you  with  a  copy of the
Prospectus five business days before you subscribe.We are prohibited
from selling  the Units to you until five days after you receive the
Prospectus.  If  you  did not receive the Prospectus. If you did not
receive the Prospectus five business days in  advance,  you have the
right to withdraw your subscription until those 5 days have elapsed.


8.  INVESTOR SIGNATURES
IMPORTANT  FORM W-9 CERTIFICATION INSTRUCTIONS:  YOU  MUST CROSS OUT ITEM
(2) BELOW IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT  YOU  ARE  SUBJECT TO
BACKUP  WITHHOLDING  BECAUSE  OF UNDERREPORTING  INTEREST OR DIVIDENDS ON
YOUR  TAX  RETURN. However,  if after being notified by the IRS that  you
were subject   to   backup  withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not
cross  out  item  (2).  Under  penalties  of perjury I certify that:

(1)The number shown on  this  form is my correct  Taxpayer Identification
Number (or I am waiting for a  number  to  be issued to me), AND (2) I am
not subject to backup withholding either because I have not been notified
by  the  Internal  Revenue  Service (IRS) that  I  am subject  to  backup
withholding as a result of a failure to report all interest or dividends,
or the IRS has notified   me  that  I  am  no  longer  subject  to backup
withholding.

IMPORTANT -  CHECK ONE:

THE INVESTOR IS A UNITED STATES CITIZEN OR RESIDENT ALIEN.  Check Here  [ ]
THE INVESTOR IS A FOREIGN INVESTOR.     Check Here   [ ] (Nonresident Alien
or Individual, Foreign Corporation, Foreign Partnership, or  Foreign  Trust
or Estate).

Note: If this investment is to be held within a qualified plan, such
as an IRA or Keogh Plan, the investor(s) and custodian must sign in
this Section 8.

(I/WE  AM/ARE ARE AUTHORIZED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT ON
BEHALF OF THE PERSON(s) OR  ENTITY(s) LISTED IN 3 ABOVE) NEITHER  A  BROKER,
DEALER, INVESTMENT  ADVISER  NOR  ANY  OF  THEIR  AGENTS  MAY  SIGN ON BEHALF
OF AN INVESTOR. This Subscription Agreement is executed this  day of  , 200 .



Investor Signature(s) [X]                          [X]


Print Name & Capacity                              Print Name & Capacity


Tax ID Number (Primary)                            Tax ID Number



Authorized Signature of Custodian
(If Applicable)                                     Medallion Stamp

9. BROKER/DEALER INFORMATION (Registered representative signature required
for processing.  Please type or print.)


Broker/Dealer Firm                             Registered Representative Name


Registered Representative's Office Address     Registered Representative's
                                               E-mail Address


City                State          Zip Code    Phone (including area code)

To substantiate compliance with Rule 2810 (b)(2) of the NASD'S Conduct Rules,
the undersigned registered representative hereby  certifies  as follows:

1. I have reasonable grounds to believe, based on information obtained from
   the  Subscriber  concerning  investment  objectives,  other investments,
   financial situations and  needs and other information known to  me, that
   investment  in  the  Fund  is  suitable for such Subscriber in  light of
   income,   finnancial    position,  net  worth  and   other   suitability
   characteristics.

2. I have discussed with the Subscriber the risks associated with and the
   liquidity of an investment in the Fund.

Dated:
                                        Signature Registered Representative


Participatating Dealer Approval Signature (if required)                 Title:

Principal's Name - Typed or Printed

AEI Fund Management XXI, Inc., as Manager      AEI Fund Management XXI, Inc.
of AEI Fund 26 LLC, hereby  accepts  this
Subscription   Agreement  this     day of      By


ATTEST                                         Its


                  AEI INCOME & GROWTH FUND 26 LLC
                SUBSCRIPTION AGREEMENT INSTRUCTIONS


INVESTOR            To  purchase  Units  of the  currently effective  LLC
INSTRUCTIONS        complete  and  sign  the  Subscription Agreement  and
                    deliver  it  to your broker, together with your check.
                    YOUR CHECK SHOULD BE MADE PAYABLE TO:   FIDELITY BANK
                    AEI  FUND  26   ESCROW.   In  order to invest, it  is
                    necessary   that   all   items  on  the  Subscription
                    Agreement be completed.

1. INVESTMENT       Limited  Liability  Company interests in the Fund are
                    being offered in units of $10. Insert  the  number of
                    Units to be purchased,  multiply the dollar amount of
                    the investment ($10 x No.of Units). You must purchase
                    a minimum of 500 ($5,000) Units to invest.

2. OWNERSHIP        Check the appropriate  box indicating the manner in
                    which title is to be held. Please note that the box
                    checked   must  be  consistent with the  number  of
                    signatures appearing in Section 8. (See Instruction
                    8). In the  case  of   partnerships,  corporations,
                    custodianships  or  trusts, the box checked must be
                    consistent with the legal title (registration).

PARTICIPANTS IN IRAS AND KEOGH PLANS SHOULD NOTE THE PURCHASE OF LLC UNITS
DOES NOT IN ITSELF  CREATE  THE   PLAN; YOU MUST CREATE THE PLAN THROUGH A
BONAFIDE CUSTODIAN OR TRUSTEE WHO WILL ALSO SIGN THE SUBSCRIPTION AGREEMENT
IN BLOCK 8.

3. REGISTERED       Please type or print the exact name (registration)
   OWNER            that   should  appear  on  the  account.   If  the
                    investor  is  an  individual, a partnership  or a
                    corporation,  please  include in this space   the
                    complete  name  and title in which the investment
                    is to be held. If the investor is a trust such as
                    an IRA or Keogh Plan, please include the name and
                    address of the trustee and the trust name. In the
                    case of a trust or custodian investment including
                    IRAs,   Keogh    Plans   and   other   trusts  or
                    custodianships,   quarterly   distributions   and
                    investment  correspondence  will  be sent to  the
                    trustee or custodian at the mailing address.  The
                    plan participant will receive  correspondence at
                    at home. ALL  ACCOUNTS MUST SUPPLY THE INVESTOR'S
                    RESIDENTIAL ADDRESS  (FOR  BLUE  SKY REGISTRATION
                    PURPOSES).

4. QUARTERLY        After impounds are met, Fidelity Bank will release
   DISTRIBUTIONS    the interest earned during the impound   period to
   (Automatic       the designated address  (distribution reinvestment
   deposits         does not apply to impound interest). AEI  Fund  26
   or checks)       will then commence distributions of cash available
                    for distribution to investors. Please insert "same"
                    if  the  checks  are  to  be mailed to the mailing
                    address. Please insert the name and address of the
                    financial institution as well as the account number,
                    if checks are to be sent to a bank, savings and loan,
                    or other financial institution or destination.

                    For Electronic Direct Deposit through ACH, a voided
                    check or savings deposit slip is required.

5. DISTRIBUTION     Answer the  question  by checking yes or no if the
   REINVESTMENT     investor elects to participate in the Distribution
                    Reinvestment Plan.

6. CONSENT TO       Please   complete   this  section if you consent to
   ELECTRONIC       electronic delivery of financial reports.  You must
   DELIVERY OF      have an e-mail address to use this service.   Enter
   REPORTS          your name and  e-mail   address  and  enter    your
                    signature(s) where indicated.

7. INVESTOR         To comply with securities regulations, the investor
   REPRESENTATIONS  MUST make the representations  in this Subscription
                    Agreement.  ALL THREE SPACES MUST  BE  INITIALED BY
                    THE BENEFICIAL OWNER(S).


8. INVESTOR         IRS regulations require our escrow bank to have the
   SIGNATURES,      W-9 ceftification completed for all Limited Members.
   CERTIFICATIONS,  This certifies that the taxpayer is not subject  to
   AND CUSTODIAN    backup   withholidng.   If  ceftification  is   not
   SIGNATURE AND    completed, the escrow agent must legally  withhold,
   GUARANTEE        and  pay  to the  IRS, 20% of the taxpayer's escrow
                    interest. Read the Subscription Agreement carefully
                    for additional W-9 Certification Instrustions.   If
                    the investor is a Nonresident Alien or  Individual,
                    Foreign Corporation, Foreign Partnership or Foreign
                    Trust or Estate, please check the   FOREIGN  STATUS
                    CETRIFICATION box.  TO AUTHORIZED  THE  INVESTMENT,
                    sign in  the space(s) provided.  If  title is to be
                    held as joint tenancy or tenants in common, at least
                    two  signatures  are  required.  In  the  case   of
                    community property, only one investor  signature is
                    required (see reverse side for  details on required
                    signatures).  ALL INVESTORS AND/OR PLAN PARTICIPANTS
                    MUST   PROVIDE  SOCIAL  SECURITY  NUMBERS.  Trusts,
                    corporations,  partnerships, custodians and estates
                    MUST ADDITIONALLY  FURNISH  a  tax   identification
                    number.  Custodians of accounts must  also sign and
                    medallion stamp in the space provided.


9. BROKER/DEALER    IT IS NECESSARY THAT ALL ITEMS BE FULLY  COMPLETED.
   INFORMATION      INCLUDE REGISTERED REPRESENTATIVE'S NAME AND BRANCH
                    OFFICE   ADDRESS.    THE  REGISTERED REPRESENTATIVE
                    MUST SIGN AND  DATE  WHERE INDICATED IN  ORDER  FOR
                    THE   APPLICATION TO BE   ACCEPTED.    PROVIDE  THE
                    REGISTERED REPRESENTATIVE'S  TELEPHONE   NUMBER AND
                    E-MAIL ADDRESS.



             AEI INCOME & GROWTH FUND 26 LLC
            STANDARD REGISTRATION REQUIREMENTS

The following requirements have been established for the
various  forms  of registration. Accordingly,  complete
subscription agreements and such supporting material as
may be necessary, must be provided.

TYPE OF OWNERSHIP AND SIGNATURE(S) REQUIRED

1. INDIVIDUAL: One signature required.

2. JOINT TENANTS WITH RIGHT OF SURVIVORSHIP: All parties must sign.

3. TENANTS IN COMMON: All parties must sign.

4. COMMUNITY PROPERTY: Only one investor signature is required.

5. PENSION/PROFIT SHARING PLANS: The trustee signs the Subscription Agreement.

6. IRA AND IRA ROLLOVERS: Requires signature of authorized signer
   (e.g. an officer) of the bank, trust  company,  or other  fiduciary.  The
   address of the trustee must be provided in order for them to receive
   distributions and other pertinent information regarding the investment.

7. KEOGH (HR 10):  Same  rules as those applicable to IRAs.

8. TRUST:  The trustee signs  the  Subscription  Agreement. Provide the name
   of  the trust, the name of the trustee and the name of the beneficiary.
   Please provide a copy of the facing and signature pages of the
   Trust document.

9. PARTNERSHIP: Identify the entity as to whether it is a  general or limited
   partnership.  The general partners must be identified and their signatures
   obtained  on  the  order.   In  the  case  of an  investment  by a general
   partnership, all partners must sign (unless a "managing partner"  has been
   designated  for  the  partnership,  in which case he may sign on behalf of
   the partnership if a certified copy of the document granting him authority
   to invest on behalf of the partnership is submitted).

10.CORPORATION:   The  Subscription  Agreement  must  be  accompanied by(1) a
   certified  copy  of  the  resolution of the Board of Directors designating
   the officer(s) of the corporation  authorized  to sign on  behalf  of  the
   corporation and (2) a certified copy of the Board's resolution authorizing
   the investment.

11.UNIFORM  GIFT TO MINORS  ACT (UGMA):   The   required signature is that of
   the custodian, not of the parent (unless   the parent  has been designated
   as   the custodian). Only one child is permitted in each investment  under
   the Uniform Gift to Minors  Act. In addition,  designate state under which
   UGMA  is  being   made.

12.OTHER: Please  indicate  any  other ownership type. This space may also be
   used to indicate that Transfer On Death ("TOD") instructions  are included
   with the Subscription Agreement.   If  TOD  instructions are included, the
   form of Ownership must still be indicated within Section 2. Please contact
   AEI   Investment Services  at   800-328-3519   to   obtain   the   form(s)
   necessary to provide complete TOD instructions.

SUBSCRIPTION DOCUMENTS INCLUDE:

1. Completed Subscription Agreement
   (all information completed, dated and signed)

2. Subscriber's Check
   (made payable to Fidelity Bank - AEI Fund 26 Escrow)

IMPORTANT: MISSING SIGNATURES OR INVESTOR REPRESENTATIONS WILL  DELAY  ORDER
           PROCESSING. ORIGINAL SIGNATURES  ARE REQUIRED.

MAIL TO:     Make your check payable to FIDELITY BANK- AEI FUND
             26 ESCROW  and return with the Subscription  Agreement
             to:

AEI Fund Management, Inc.                       WIRING INSTRUCTIONS
1300 Wells Fargo Place                          Bank: Fidelity Bank
30 East Seventh Street                                7600 Parklawn Avenue
St. Paul, Minnesota 55101                             Edina, MN  55435
                                                Phone#: (952) 831-6600
651-227-7333  651-227-7705 (fax)  800-328-3519  RT#: 091014924
                                                Account Name: AEI Income &
                                                Growth Fund 26 Escrow
                                                Account #: xxx-xx-xxx
                                                Special instructions:
                                                Contact Dorene Tryon or
                                                Jane Holtan when wire
                                                is received.





     No person has been
     authorized in connection                    10,000,000 Units
     with this offering to
     give any information or                       AEI INCOME &
     to make any                                GROWTH FUND 26 LLC
     representation other than
     those contained in this
     prospectus. This
     prospectus does not
     constitute an offer or
     solicitation in any state                      PROSPECTUS
     or other jurisdiction to
     any person to whom it is
     unlawful to make such
     offer or solicitation.
     Neither the delivery of
     this prospectus nor any
     sale hereunder shall
     under any circumstances                   AEI Securities, Inc.
     create an implication
     that there has been no
     change in AEI Fund 26's
     affairs since the date                   1300 Wells Fargo Place
     hereof. If, however, any                 30 Seventh Street East
     material change in AEI                     St. Paul, MN 55101
     Fund 26's affairs occurs            800-328-3519        651-227-7333
     at any time when this                       www.aeifunds.com
     prospectus is required to
     be delivered, this
     prospectus will be
     amended or supplemented
     accordingly.

     Investors are not to
     construe the contents of
     this prospectus as legal
     or tax advice. Each
     investor should consult
     his or her own counsel,
     accountant and other
     financial advisors (and
     be responsible for their
     fees) regarding the
     legal, tax and investment
     aspects of this offering.




                               PART II

             INFORMATION NOT REQUIRED IN THE PROSPECTUS

      The disclosure required by Item 24, Item 25 and Item 26 is incorporated
by reference to previous filings.


Item 27.  Exhibits.

         Exhibit No.            Description

     *1.1   Revised Form of Dealer-Manager Agreement

     *1.2   Form of Dealer Agreement

     *3.1   Certificate of Formation

      3.2   Form of Operating Agreement included as
            Exhibit A to Prospectus

     *5     Opinion of Dorsey & Whitney LLP as to the legality of the
            securities registered, including consent

     *8     Opinion of Dorsey & Whitney LLP as to tax matters,
            including consent

    *10.1   Revised Form of Impoundment Agreement with Fidelity Bank,
            Edina, Minnesota



    *10.2   Assignment and  Assumption  of  Lease and Guaranty dated
            April 3, 2006 between the Company and AEI Fund Management
            XVII, Inc. realting  to  the Property at 6959 East  21st
            Street, Wichita,  Kansas  (incorporated by reference  to
            Exhibit  10.1 of Form 8K filed April 5, 2006).

    *10.3   Assignment and  Assumption of Purchase and Sale Agreement
            dated May 24, 2006 between the Company, AEI Income & Growth
            Fund 24 LLC and AEI Fund Management, Inc. relating to the
            Property at 65 North University Boulevard, Middletown, Ohio
            (incorporated by reference to Exhibit 10.1 of Form 8K filed
            June 5, 2006).

    *10.4   Assignment  and  Assumption  of  Lease dated May 31, 2006
            between the Company,  AEI Income & Growth  Fund  24 LLC and
            Blue Partners, LLC relating to the Property  at  65  North
            University Boulevard, Middletown Ohio (incorporated by
            reference to Exhibit 10.2 of Form 8K filed June 5, 2006).

    *10.5   Assignment and  Assumption  of  Purchase Agreement dated
            September 11, 2006 between the Company, AEI Fund Management
            XVII, Inc. and AEI Fund Management, Inc relating to the
            Property at 7345 E Washington Street, Indianapolis,
            Indiana (incorporated by reference to Exhibit 10.1 of
            Form 8-K filed September 26, 2006).

    *10.6   Net Lease Agreement dated September 21, 2006 between
            the Company, AEI Fund Management XVII, Inc. and
            Apple Indiana II LLC relating to the Property at 7345
            E Washington Street, Indianapolis, Indidana
            (incorporated by reference to Exhibit 10.2 of
            Form 8-K filed September 26, 2006).

    *10.7  Assignment and Assumption of Lease dated December  29,
           2006 between the Company, AEI Income & Growth Fund XXII
           Limited Partnership and AEI Fund  Management XVII, Inc.
           relating to the Property at 1516 South Washington Street,
           Crawfordsville, Indiana (incorporated by reference to
           Exhibit 10.1 of Form 8-K filed January 8, 2007).


     23     Consent of Independent Public Accountants


     *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  (incorporated
     by  reference  to  Exhibit 31.1 of Form 10KSB filed March 27,
     2007).

     *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 (incorporated
     by reference to Exhibit 31.2 of Form 10KSB  filed March  27,
     2007).

     *32   Certification  of Chief Executive  Officer  and  Chief
     Financial  Officer  of Managing Member pursuant  to  Section
     906  of  the  Sarbanes-Oxley Act  of  2002  (incorporated by
     reference to Exhibit 32 of From 10KSB filed March 27, 2007).

*Previously filed



Item 28.  Undertakings.

     The undersigned small business issuer undertakes

          (1) to file, during any period in which it offers
     or sells securities, a post-effective amendment to this
     registration statement to

          (i) include any prospectuses required by Section
          10(a)(3) of the Securities Act of 1933 (the
          "Securities Act");

                             II-1

          (ii) reflect in the prospectus any facts or events
          which, individually or together, represent a
          fundamental change in the information in the
          registration statement, and

          (iii) include any additional of changed material
          information on the plan of distribution ,

          (2) that for the purpose of determining any
     liability under the Securities Act the undersigned
     small business issuer will treat each post-effective
     amendment as a new registration statement relating to
     the securities offered and will treat the offering of
     the securities at that time to be the initial bona fide
     offering,

          (3) that all post-effective amendments will comply
     with the applicable forms, rules and regulations of the
     Securities and Exchange Commission (the "Commission")
     in effect at the time the post-effective amendments are
     filed,

          (4) to file a post-effective amendment to remove
     from registration any of the securities being
     registered which remain unsold at the end of the
     offering; and

          (5) for determining liability of the undersigned
     small business issuer under the Securities Act to any
     purchaser in the initial distribution of the
     securities, the undersigned small business issuer
     undertakes that in a primary offering of securities of
     the undersigned small business issuer pursuant to this
     registration statement, regardless of the underwriting
     method used to sell the securities to the purchaser, if
     the securities are offered or sold to such purchaser by
     means of any of the following communications, the
     undersigned small business issuer will be a seller to
     the purchaser and will be considered to offer or sell
     such securities to such purchaser:

          (i) Any preliminary prospectus or prospectus of
          the undersigned small business issuer relating to
          the offering required to be filed pursuant to Rule
          424 (230.424 of this chapter);

          (ii) Any free writing prospectus relating to the
          offering prepared by or on behalf of the
          undersigned small business issuer or used or
          referred to by the undersigned small business
          issuer;

          (iii) The portion of any other free writing
          prospectus relating to the offering containing
          material information about the undersigned small
          business issuer or its securities provided by or
          on behalf of the undersigned small business
          issuer; and

          (iv) Any other communication that is an offer in
          the offering made by the undersigned small
          business issuer to the purchaser.

     The undersigned small business issuer undertakes to
send to each limited member at least on an annual basis a
detailed statement of any transactions with the managing
members or their affiliates, and of fees, commissions,
compensation and other benefits paid, or accrued to the
managing members or their affiliates for the fiscal year
completed, showing the amount paid or accrued to each
recipient and the services performed.

     The undersigned small business issuer undertakes to
provide to the limited members the financial statements
required by Form 10-K for the first full fiscal year of
operations of the Fund.

     The undersigned small business issuer undertakes to
file a sticker supplement pursuant to Rule 424(b)(3) under
the Act during the distribution period describing each
property not identified in the prospectus at such time as
there arises a reasonable probability that such property
will be acquired and to consolidate such information in a
post- effective amendment filed at least once every three
months, with the information contained in such supplement or
post-effective amendment provided simultaneously to the
existing limited members.  Each sticker supplement shall
disclose all compensation and fees received by the managing
members and their affiliates in connection with any such
acquisition.

     The undersigned small business issuer also undertakes
to file, after the end of the distribution period, a current
report on Form 8-K containing the financial statements and
any additional information required by Form S-11, to reflect
each commitment (i.e., the signing of a binding purchase
agreement) made after the end of the distribution period
involving the use of 10% or more (on a cumulative basis) of
the net proceeds of the offering and to provide the
information contained in such report to the limited members
at least once each quarter after the distribution period of
the offering has ended.

                             II-2

     Each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to this offering, shall
be deemed to be part of and included in the registration
statement as of the date it is first used after
effectiveness; provided, however, that no statement made in
a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or
deemed incorporated by reference into the registration
statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of
sale prior to such first use, supersede or modify any
statement that was made in the registration statement or
prospectus that was part of the registration statement or
made in any such document immediately prior to such date of
first use.

     Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to managing
members of the undersigned small business issuer pursuant to
the operating agreement, or otherwise, the undersigned small
business issuer has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.  In the event that a claim for
indemnification against such liabilities (other than the
payment by the Securities and Exchange of expenses incurred
or paid by a managing member of the undersigned small
business issuer in the successful defense of any action,
suit or proceeding) is asserted by a managing member in
connection with the securities being registered, the
undersigned small business issuer will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such
issue.
                             II-3

                                 TABLE VI

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

    The following table provides information with respect to properties
           acquired in the three years ended December 31, 2006.




                                   Applebee's
                                    Ashland
   Name, Location and                Ohio
    Type of Property               Restaurant
                            
Gross Leasable Space                   3,491
Date of Purchase                     4/30/04
Mortgage Financing at
 Date of Purchase                          0
Cash Down Payment                 $1,923,432
Contract Purchase
 Price Plus
 Acquisition Fee                           0
Other Cash Expenditures
 Expensed                                  0
Other Cash Expenditures
 Capitalized                          35,840
Total Acquisition Cost            $1,959,272




                                II-4



                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                        AEI REAL ESTATE FUND XVIII



                              Jared
                             Jewelry    Applebee's      Eckerd
                            Lakewood       Stow         Auburn
   Name, Location and       Colorado       Ohio        New York
    Type of Property      Retail Store  Restaurant    Retail Store
                                            
Gross Leasable Space           6,104          5,066         13,813
Date of Purchase              2/5/04        4/30/04        5/10/04
Mortgage Financing at
 Date of Purchase                  0              0              0
Cash Down Payment         $1,989,981(a)  $1,548,942(a)  $2,243,950(a)
Contract Purchase
 Price Plus
 Acquisition Fee                   0              0              0
Other Cash Expenditures
 Expensed                          0              0              0
Other Cash Expenditures
 Capitalized                  27,652         26,813         43,183
Total Acquisition Cost    $2,017,633     $1,575,755     $2,287,133


  (a) Represents a partial ownership interest in such property.
      An affiliated entity(s) purchased the remaining interest.


                                II-5


                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

            AEI NET LEASE INCOME & GROWTH FUND XIX





                          Jared                                  Advance       Tractor
                         Jewelry      Applebee's      Eckerd      Auto          Supply
                         Lakewood        Stow         Auburn    Harlingen,    Mesquite,
   Name, Location and    Colorado        Ohio        New York     Texas         Texas
    Type of Property   Retail Store   Restaurant   Retail Store Retail Store Retail Store

                                                              
Gross Leasable Space        6,104         5,066        13,813         6,768        19,080
Date of Purchase           2/5/04       4/30/04       5/10/04       2/17/06       3/10/06
Mortgage Financing at
Date of Purchase                0             0             0             0             0
Cash Down Payment      $1,989,981(a) $1,548,942(a) $2,243,950(a) $1,561,900   $1,214,800(a)
Contract Purchase
Price Plus
Acquisition Fee                 0             0             0             0            0
Other Cash Expenditures
Expensed                        0             0             0             0            0
Other Cash Expenditures
Capitalized                27,622        26,813        43,341        38,103       16,825
Total Acquisition Cost $2,017,603    $1,575,755    $2,287,291    $1,600,003   $1,231,625


  (a) Represents a partial ownership interest in such property.
      An affiliated entity(s) purchased the remaining interest.


                                II-6


                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                   AEI NET LEASE INCOME & GROWTH FUND XX




                            Chammpps        Jared                    Tractor
                            Americana      Jewlery     Applebee's    Supply
                          West Chester,    Hanover,     Sandusky     Mesquite,
   Name, Location and         Ohio         Maryland       Ohio        Texas
    Type of Property      Restaurant     Retail Store  Restaurant  Retail Store

                                                      
Gross Leasable Space         9,935         5,809          4,994         19,080
Date of Purchase           1/13/04        2/9/04        4/30/04        3/10/06
Mortgage Financing at
 Date of Purchase                0             0              0              0
Cash Down Payment       $1,565,000(a) $1,963,800(a)  $1,254,896(a)  $1,214,800(a)
Contract Purchase
 Price Plus
 Acquisition Fee                 0             0              0              0
Other Cash Expenditures
 Expensed                        0             0              0              0
Other Cash Expenditures
 Capitalized                 4,884        25,305         22,047         16,824
Total Acquisition Cost  $1,569,884    $1,989,105     $1,276,943     $1,231,624


(a)  Represents a partial ownership interest in such property.
     An affiliated entity(s) purchased the remaining interest.


                                II-7





                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                       AEI INCOME & GROWTH FUND XXI


                           Jared                    Jared
                          Jewelry      Eckerd      Jewlery        CarMax       Applebee's
                          Hanover      Utica     Auburn Hills Lithia Springs   Johnstown,
   Name, Location and     Maryland    New York     Michigan       Georgia     Pennsylvania
    Type of Property   Retail Store Retail Store Retail Store  Retail Store    Restaurant
                                                               
Gross Leasable Space         5,809        14,700         5,759         19,242         5,194
Date of Purchase            2/9/04       9/20/04       1/14/05        3/18/05       9/21/06
Mortgage Financing at
 Date of Purchase                0             0             0              0             0
Cash Down Payment       $1,963,800(a) $1,818,800(a) $1,440,000(a)  $1,864,000(a) $1,655,391(a)
Contract Purchase
 Price Plus
 Acquisition Fee                 0             0             0              0             0
Other Cash Expenditures
 Expensed                        0             0             0              0             0
Other Cash Expenditures
 Capitalized                25,335        29,307        26,048         21,231        27,496
Total Acquisition Cost  $1,989,135    $1,848,107    $1,466,048     $1,885,231    $1,682,887


(a) Represents a partial ownership interest in such property.
    An affiliated entity(s) purchased the remaining interest.

                                II-8



                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                       AEI INCOME & GROWTH FUND XXII


                          Champps        Jared                     Advance
                         Americana      Jewelry     Applebee's      Auto        Applebee's
                       West Chester,  Sugar Land    Johnstown   Indianapolis, Crawfordsville
   Name, Location and      Ohio         Texas      Pennsylvania    Indiana       Indiana
    Type of Property    Restaurant   Retail Store   Restaurant  Retail Store    Restaurant
                                                              
Gross Leasable Space        9,935         6,115          5,194         7,000          5,260
Date of Purchase          1/13/04       7/15/04        9/21/06      12/21/06       12/29/06
Mortgage Financing at
 Date of Purchase               0             0              0             0              0
Cash Down Payment      $1,565,000(a) $1,510,760(a)  $1,014,595(a) $1,217,775(a)  $1,827,193(a)
Contract Purchase
 Price Plus
 Acquisition Fee                0             0              0             0              0
Other Cash Expenditures
 Expensed                       0             0              0             0              0
Other Cash Expenditures
 Capitalized                4,884        23,206         16,592        26,398         29,463
Total Acquisition Cost $1,569,884    $1,533,966     $1,031,187    $1,244,173     $1,856,656


(a) Represents  a  partial  ownership  interest  in  such  property.   An
    affiliated entity(s) purchased the remaining interest.

                                II-9



                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                        AEI INCOME & GROWTH FUND 23


                               Jared
                              Jewelry          CarMax
                           Madison Heights    Columbia
   Name, Location and        Michigan       South Carolina
     Type  of  Property     Retail Store     Retail Store

Gross Leasable Space            6,067             41,169
Date of Purchase               2/6/04            9/15/05
Mortgage Financing at
 Date of Purchase                   0                  0
Cash Down Payment          $1,920,620(a)      $1,778,625(a)
Contract Purchase
 Price Plus
 Acquisition Fee                    0                  0
Other Cash Expenditures
 Expensed                           0                  0
Other Cash Expenditures
 Capitalized                   27,418             24,385
Total Acquisition Cost     $1,948,038         $1,803,010


(a) Represents a partial ownership interest  in such property.
    An affiliated entity(s) purchased the remaining interest.

                                II-10

                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                  AEI INCOME & GROWTH FUND 24


                                                     Advance
                         Applebee's     CarMax        Auto        Applebee's
                          Sandusky  Lithia Springs  Middletown,    Fishers,
   Name, Location and      Ohio        Georgia         Ohio        Indiana
    Type of Property    Restaurant  Retail Store   Retail Store   Restaurant
                                                     
Gross Leasable Space         4,994        19,242       6,880           5,050
Date of Purchase           4/30/04       3/18/05      6/1/06         9/21/06
Mortgage Financing at
 Date of Purchase                0             0           0               0
Cash Down Payment       $1,533,762(a) $1,304,800(a) $819,180(a)   $2,954,256
Contract Purchase
 Price Plus
 Acquisition Fee                 0             0           0               0
Other Cash Expenditures
 Expensed                        0             0           0               0
Other Cash Expenditures
 Capitalized                27,509        15,536      16,710          48,297
Total Acquisition Cost  $1,561,271    $1,320,336    $835,890      $3,002,553


  (a) Represents a partial ownership interest  in such property.
      An affiliated entity(s) purchased the remaining interest.

                                II-11


                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                  AEI INCOME & GROWTH FUND 25


                           Jared           Jared                    Mimi's        Jared
                          Jewelry         Jewelry     Applebee's     Cafe        Jewelry
                      Madison Heights, Godlettsville, Macedonia,  Kansas City, Auburn Hills
   Name, Location and     Michigan       Tennessee      Ohio        Missouri     Michigan
    Type of Property   Retail Store    Retail Store   Restaurant   Restaurant  Retail Store
                                                                
Gross Leasable Space         6,067         5,818           5,400        6,935         5,759
Date of Purchase           2/6/04         2/6/04         4/30/04      6/30/04       1/14/05
Mortgage Financing at
 Date of Purchase               0              0               0            0             0
Cash Down Payment       $ 840,271(a)   $ 972,300(a)   $3,079,652   $1,100,000(a) $2,160,000(a)
Contract Purchase
 Price Plus
 Acquisition Fee                0              0               0            0             0
Other Cash Expenditures
 Expensed                       0              0               0            0             0
Other Cash Expenditures
 Capitalized               12,321         15,954          55,146       10,561        39,067
Total Acquisition Cost  $ 852,592      $ 988,254      $3,134,798   $1,110,561    $2,199,067



<a)  Represents a partial ownership interest in such property.  An affiliated
     entity(s) purchased the remaining interest.
                                II-12



                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                  AEI INCOME & GROWTH FUND 25 (continued)


                          Tractor                   Johnny        Tractor       Jared
                          Supply       CarMax       Carino's       Supply       Jewlery
                          Marion,   Lithia Springs, Pueblo,       Yankton,     Concord,
   Name, Location and    Indiana      Georgia       Colorado     South Dakota New Hampshire
    Type of Property   Retail Store  Retail Store  Restaurant    Retail Store  Retail Store
                                                             
Gross Leasable Space        19,097       19,242         6,733        19,234       5,868
Date of Purchase            2/9/05      3/18/05       6/20/05      10/25/05     12/1/05
Mortgage Financing at
 Date of Purchase                0            0             0             0           0
Cash Down Payment       $2,900,000   $4,194,000(a) $2,255,100    $2,225,800  $4,072,800
Contract Purchase
 Price Plus
 Acquisition Fee                 0            0             0             0           0
Other Cash Expenditures
 Expensed                        0            0             0             0           0
Other Cash Expenditures
 Capitalized                39,385       48,438        36,118        40,136      84,834
Total Acquisition Cost  $2,939,385   $4,242,438    $2,291,218    $2,265,936  $4,157,634

                        II-13


                           TABLE VI (Continued)

                  ACQUISITIONS OF PROPERTIES BY PROGRAMS
                                (Unaudited)

                  AEI INCOME & GROWTH FUND 25 (continued)


                         Jared                    Advance      Advance
                        Jewlery    Gart Sports     Auto         Auto
                        Aurora,      Wichita,   Brownsville, Indianapolis
   Name, Location and  Illinois     Kansas         Texas       Indiana
    Type of Property  Retail Store Retail Store Retail Store Retail Store
                                                 
Gross Leasable Space         6,051       52,259        6,880       7,000
Date of Purchase          12/16/05     12/22/05      2/17/06    12/21/06
Mortgage Financing at
 Date of Purchase                0            0            0           0
Cash Down Payment       $4,192,600  $3,300,000(a) $1,544,500    $655,725(a)
Contract Purchase
 Price Plus
 Acquisition Fee                 0           0             0           0
Other Cash Expenditures
 Expensed                        0           0             0           0
Other Cash Expenditures
 Capitalized                78,732      46,155        40,769      14,251
Total Acquisition Cost  $4,271,332  $3,346,155    $1,585,269    $669,976


  (a) Represents a partial ownership interest  in such property.
      An affiliated entity(s) purchased the remaining interest.
                                II-14




                             SIGNATURES

        Pursuant  to  the requirements of the Securities  Act  of
1933, the Registrant certifies that it has reasonable grounds  to
believe  that it meets the requirements for filing on  Form  SB-2
and  has duly caused this Post-Effective Amendment No. 6  to  the
Registration  Statement  to  be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized, in the City of  St.  Paul
on the 4th day of April 2007.

                              AEI INCOME & GROWTH FUND 26 LLC

                              By:  AEI Fund Management XXI, Inc.
                                   Managing Member


                              By: /s/ Robert P Johnson
                                      Robert P. Johnson, President




  In accordance with the requirements of the Securities Act of 1933,
this Amendment No. 6 to the Registration Statement was signed by the
following persons in the capacities and on the dates stated.

MANAGING MEMBER

AEI Fund Management XXI, Inc.                                Date


By:/s/ Robert P Johnson   Sole Director and             April 4, 2007
       Robert P.Johnson   President (principal
                          executive officer)


By:/s/ Patrick W Keene    Chief Financial Officer       April 4, 2007
       Patrick W.Keene    and Treasurer (principal
                          financial and accounting
                          officer)


INDIVIDUAL MANAGING MEMBER



By:/s/ Robert P Johnson   Individual Managing Member     April 4, 2007
       Robert P. Johnson



EXHIBIT INDEX

Exhibit No.            Description

     *1.1   Revised Form of Dealer-Manager Agreement

     *1.2   Form of Dealer Agreement

     *3.1   Certificate of Formation

      3.2   Form of Operating Agreement included as
            Exhibit A to Prospectus

     *5     Opinion of Dorsey & Whitney LLP as to the legality of the
            securities registered, including consent

     *8     Opinion of Dorsey & Whitney LLP as to tax matters,
            including consent

    *10.1   Revised Form of Impoundment Agreement with Fidelity Bank,
            Edina, Minnesota


    *10.2   Assignment and  Assumption  of  Lease and Guaranty dated
     April 3, 2006 between the Company and AEI Fund Management XVII,
     Inc. realting to the Property at 6959 East 21st Street, Wichita,
     Kansas  (incorporated  by  reference to Exhibit 10.1 of Form 8K
     filed April 5, 2006).

    *10.3   Assignment and  Assumption of Purchase and Sale Agreement
     dated May 24, 2006 between the Company, AEI Income & Growth Fund
     24 LLC and AEI Fund Management, Inc. relating to the Property at
     65 North University Boulevard, Middletown, Ohio (incorporated by
     reference to Exhibit 10.1 of Form 8K filed  June 5, 2006).

    *10.4   Assignment  and  Assumption  of  Lease dated May 31, 2006
     between the Company,  AEI Income & Growth  Fund  24 LLC and Blue
     Partners, LLC relating to the Property  at  65  North University
     Boulevard, Middletown Ohio (incorporated by reference to Exhibit
     10.2 of Form 8K filed June 5, 2006).

    *10.5    Assignment  and  Assumption   of   Purchase and Sale
     Agreement dated September 11, 2006 between the Company,   AEI
     Fund Management XVII,  Inc. and  AEI Fund  Management,   Inc.
     relating  to  the  Property  at 7345  E.  Washington  Street,
     Indianapolis, Indiana (incorporated by reference  to  Exhibit
     10.1 of Form 8-K filed September 26, 2006).

    *10.6    Net Lease Agreement dated September 21, 2006 between
     the Company, AEI Fund Management XVII, Inc. and Apple Indiana
     II LLC relating to the Property at 7345 E. Washington Street,
     Indianapolis, Indiana (incorporated by reference  to  Exhibit
     10.2 of Form 8-K filed September 26, 2006).

    *10.7  Assignment and Assumption of Lease dated December  29,
     2006  between  the  Company, AEI Income & Growth  Fund  XXII
     Limited  Partnership  and  AEI Fund  Management  XVII,  Inc.
     relating  to  the Property at 1516 South Washington  Street,
     Crawfordsville,  Indiana  (incorporated  by   reference   to
     Exhibit 10.1 of Form 8-K filed January 8, 2007).



     23     Consent of Independent Public Accountants

     *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  (incorporated
     by reference to Exhibit 31.1 of Form 10KSB  filed  March 27,
     2007).

     *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 (incorporated
     by reference to Exhibit 31.2 of Form 10KSB  filed March  27,
     2007).

     *32   Certification  of Chief Executive  Officer  and  Chief
     Financial  Officer  of Managing Member pursuant  to  Section
     906  of  the  Sarbanes-Oxley Act  of  2002  (incorporated by
     reference to Exhibit 32 of From 10KSB filed March 27, 2007).


*  Previously filed.