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EX-32 - AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIPex32-19.txt
EX-31.1 - AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIPex31-119.txt
EX-31.2 - AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIPex31-219.txt

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

                            FORM 10-Q

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

       For the quarterly period ended:  September 30, 2009

               Commission File Number:  000-19838

   AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
     (Exact name of registrant as specified in its charter)

       State of Minnesota                  41-1677062
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)        Identification No.)

    30 East 7th Street, Suite 1300, St. Paul, Minnesota 55101
             (Address of principal executive offices)

                          (651) 227-7333
                 (Registrant's telephone number)

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

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

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

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

  Large accelerated filer          Accelerated filer

  Non-accelerated filer            Smaller reporting company [X]

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


   AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP

                              INDEX


Part I - Financial Information

 Item 1. Financial Statements (unaudited):

         Balance Sheet as of September 30, 2009 and December  31, 2008

         Statements for the Periods ended September 30, 2009 and 2008:

           Income

           Cash Flows

           Changes in Partners' Capital

         Notes to Financial Statements

 Item 2. Management's Discussion and Analysis of Financial Condition
           and Results of Operations

 Item 3. Quantitative and Qualitative Disclosures About Market Risk

 Item 4. Controls and Procedures

Part II - Other Information

 Item 1. Legal Proceedings

 Item 1A. Risk Factors

 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 Item 3. Defaults Upon Senior Securities

 Item 4. Submission of Matters to a Vote of Security  Holders

 Item 5. Other Information

 Item 6. Exhibits

Signatures


AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP BALANCE SHEET SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 ASSETS 2009 2008 CURRENT ASSETS: Cash $ 2,201,003 $ 369,055 INVESTMENTS IN REAL ESTATE: Land 1,558,642 1,903,818 Buildings and Equipment 2,919,012 3,849,603 Accumulated Depreciation (603,159) (621,928) ----------- ----------- 3,874,495 5,131,493 Real Estate Held for Sale 1,251,149 2,310,191 ----------- ----------- Net Investments in Real Estate 5,125,644 7,441,684 ----------- ----------- Total Assets $ 7,326,647 $ 7,810,739 =========== =========== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 19,357 $ 38,437 Distributions Payable 1,439,393 163,035 Unearned Rent 9,268 0 ----------- ----------- Total Current Liabilities 1,468,018 201,472 ----------- ----------- PARTNERS' CAPITAL: General Partners 6,580 5,655 Limited Partners, $1,000 per Unit; 30,000 Units authorized; 21,152 Units issued; 20,166 Units outstanding 5,852,049 7,603,612 ----------- ----------- Total Partners' Capital 5,858,629 7,609,267 ----------- ----------- Total Liabilities and Partners'Capital $ 7,326,647 $ 7,810,739 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP STATEMENT OF INCOME FOR THE PERIODS ENDED SEPTEMBER 30 Three Months Ended Nine Months Ended 9/30/09 9/30/08 9/30/09 9/30/08 RENTAL INCOME $ 107,001 $ 106,697 $ 321,006 $ 318,707 EXPENSES: Partnership Administration - Affiliates 31,170 33,853 101,111 107,907 Partnership Administration and Property Management - Unrelated Parties 4,764 3,276 21,154 22,518 Depreciation 24,469 24,729 73,407 74,187 --------- --------- --------- --------- Total Expenses 60,403 61,858 195,672 204,612 --------- --------- --------- --------- OPERATING INCOME 46,598 44,839 125,334 114,095 OTHER INCOME: Interest Income 5,006 16,691 10,403 32,013 --------- --------- --------- --------- INCOME FROM CONTINUING OPERATIONS 51,604 61,530 135,737 146,108 Income from Discontinued Operations 280,129 63,619 840,692 840,110 --------- --------- --------- --------- NET INCOME $ 331,733 $ 125,149 $ 976,429 $ 986,218 ========= ========= ========= ========= NET INCOME ALLOCATED: General Partners $ 16,730 $ 19,871 $ 28,196 $ 28,482 Limited Partners 315,003 105,278 948,233 957,736 --------- --------- --------- --------- $ 331,733 $ 125,149 $ 976,429 $ 986,218 ========= ========= ========= ========= INCOME PER LIMITED PARTNERSHIP UNIT: Continuing Operations $ 2.53 $ 3.02 $ 6.66 $ 7.17 Discontinued Operations 13.09 2.20 40.36 40.32 --------- --------- --------- --------- Total $ 15.62 $ 5.22 $ 47.02 $ 47.49 ========= ========= ========= ========= Weighted Average Units Outstanding 20,166 20,166 20,166 20,166 ========= ========= ========= ========= The accompanying Notes to Financial Statements are an integral part of this statement.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 976,429 $ 986,218 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 81,306 155,965 Gain on Sale of Real Estate (676,580) (584,999) Decrease in Payable to AEI Fund Management, Inc. (19,080) (57,131) Increase in Unearned Rent 9,268 9,267 ----------- ----------- Total Adjustments (605,086) (476,898) ----------- ----------- Net Cash Provided By Operating Activities 371,343 509,320 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from Sale of Real Estate 2,911,314 2,974,814 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions Paid to Partners (1,450,709) (4,861,445) ----------- ----------- NET INCREASE (DECREASE) IN CASH 1,831,948 (1,377,311) CASH, beginning of period 369,055 4,830,985 ----------- ----------- CASH, end of period $ 2,201,003 $ 3,453,674 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30 Limited Partnership General Limited Units Partners Partners Total Outstanding BALANCE, December 31, 2007 $ 14,625 $10,423,618 $10,438,243 20,165.79 Distributions Declared (37,445) (3,707,107) (3,744,552) Net Income 28,482 957,736 986,218 -------- ----------- ----------- ----------- BALANCE, September 30, 2008 $ 5,662 $ 7,674,247 $ 7,679,909 20,165.79 ======== =========== =========== =========== BALANCE, December 31, 2008 $ 5,655 $ 7,603,612 $ 7,609,267 20,165.79 Distributions Declared (27,271) (2,699,796) (2,727,067) Net Income 28,196 948,233 976,429 -------- ----------- ----------- ----------- BALANCE, September 30, 2009 $ 6,580 $ 5,852,049 $ 5,858,629 20,165.79 ======== =========== =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 (1) The condensed statements included herein have been prepared by the registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements. The adjustments made to these condensed statements consist only of normal recurring adjustments. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the registrant's latest annual report on Form 10-K. (2) Organization - AEI Net Lease Income & Growth Fund XIX Limited Partnership ("Partnership") was formed to acquire and lease commercial properties to operating tenants. The Partnership's operations are managed by AEI Fund Management XIX, Inc. ("AFM"), the Managing General Partner. Robert P. Johnson, the President and sole director of AFM, serves as the Individual General Partner. AFM is a wholly owned subsidiary of AEI Capital Corporation of which Mr. Johnson is the majority shareholder. AEI Fund Management, Inc. ("AEI"), an affiliate of AFM, performs the administrative and operating functions for the Partnership. The terms of the Partnership offering called for a subscription price of $1,000 per Limited Partnership Unit, payable on acceptance of the offer. The Partnership commenced operations on May 31, 1991 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. The offering terminated February 5, 1993 when the extended offering period expired. The Partnership received subscriptions for 21,151.928 Limited Partnership Units. Under the terms of the Limited Partnership Agreement, the Limited Partners and General Partners contributed funds of $21,151,928, and $1,000, respectively. During operations, any Net Cash Flow, as defined, which the General Partners determine to distribute will be distributed 90% to the Limited Partners and 10% to the General Partners; provided, however, that such distributions to the General Partners will be subordinated to the Limited Partners first receiving an annual, noncumulative distribution of Net Cash Flow equal to 10% of their Adjusted Capital Contribution, as defined, and, provided further, that in no event will the General Partners receive less than 1% of such Net Cash Flow per annum. Distributions to Limited Partners will be made pro rata by Units. AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued) Any Net Proceeds of Sale, as defined, from the sale or financing of properties which the General Partners determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Partners and 1% to the General Partners until the Limited Partners receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 12% 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 Partners and 10% to the General Partners. Distributions to the Limited Partners will be made pro rata by Units. For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of property, will be allocated first in the same ratio in which, and to the extent, Net Cash Flow is distributed to the Partners for such year. Any additional profits will be allocated in the same ratio as the last dollar of Net Cash Flow is distributed. Net losses from operations will be allocated 98% to the Limited Partners and 2% to the General Partners. For tax purposes, profits arising from the sale, financing, or other disposition of property will be allocated in accordance with the Partnership Agreement as follows: (i) first, to those partners with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Partners and 1% to the General Partners until the aggregate balance in the Limited Partners' capital accounts equals the sum of the Limited Partners' Adjusted Capital Contributions plus an amount equal to 12% 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 Partners and 10% to the General Partners. Losses will be allocated 98% to the Limited Partners and 2% to the General Partners. The General Partners are not required to currently fund a deficit capital balance. Upon liquidation of the Partnership or withdrawal by a General Partner, the General Partners will contribute to the Partnership an amount equal to the lesser of the deficit balances in their capital accounts or 1% of total Limited Partners' and General Partners' capital contributions. (3) Reclassification - Certain items related to discontinued operations in the prior year's financial statements have been reclassified to conform to 2009 presentation. These reclassifications had no effect on Partners' capital, net income or cash flows. AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (4) Investments in Real Estate - In March 2009, Tumbleweed, Inc., the tenant of the Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter 11 bankruptcy reorganization. Rents are current and the Partnership expects to continue to receive all scheduled rents in future months unless the Lease is rejected by Tumbleweed. If the Lease is assumed, Tumbleweed must comply with all Lease terms. If the Lease is rejected, Tumbleweed would be required to return possession of the property to the Partnership and the Partnership would be responsible for real estate taxes and other costs associated with maintaining the property. In July 2009, the tenant contacted the Partnership and offered to assume the Lease and extend the Lease term five years in exchange for a 15% rent reduction. The Partnership accepted this offer and agreed to a Lease Amendment, which is subject to court approval of the tenant's Plan of Reorganization. The Partnership has evaluated the lease and property value and decided that there is no impairment loss at this time. At September 30, 2009, the book value of this property was $390,388. (5) Payable to AEI Fund Management, Inc. - AEI Fund Management, Inc. performs the administrative and operating functions for the Partnership. The payable to AEI Fund Management represents the balance due for those services. This balance is non-interest bearing and unsecured and is to be paid in the normal course of business. (6) Discontinued Operations - In October 2007, the tenant of the Applebee's restaurant in Temple Terrace, Florida exercised its option to purchase the property. On March 20, 2008, the sale closed with the Partnership receiving net proceeds of $193,282 for its 9.0963% interest in the property, which resulted in a net gain of $122,708. At the time of sale, the cost and related accumulated depreciation was $96,262 and $25,688, respectively. During the first quarter of 2008, the Partnership sold its remaining 4.1062% interest in the Eckerd drug store in Auburn, New York, in two separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $203,264, which resulted in a net gain of $24,346. The cost and related accumulated depreciation of the interests sold was $187,841 and $8,923, respectively. In March 2008, the Partnership entered into an agreement to sell the Johnny Carino's restaurant in Brownsville, Texas to an unrelated third party. On May 15, 2008, the sale closed with the Partnership receiving net proceeds of $2,578,268, which resulted in a net gain of $437,945. At the time of sale, the cost and related accumulated depreciation was $2,322,610 and $182,287, respectively. AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (6) Discontinued Operations - (Continued) In February 2009, the Partnership entered into an agreement to sell the Taco Cabana restaurant in San Antonio, Texas to an unrelated third party. On March 13, 2009, the sale closed with the Partnership receiving net proceeds of $1,259,658, which resulted in a net gain of $419,943. At the time of sale, the cost and related accumulated depreciation was $1,147,274 and $307,559, respectively. At December 31, 2008, the property was classified as Real Estate Held for Sale with a carrying value of $839,715. In May 2009, the Partnership entered into an agreement to sell the Tractor Supply Company retail store in Mesquite, Texas to an unrelated third party. On July 2, 2009, the sale closed with the Partnership receiving net proceeds of $1,331,175, which resulted in a net gain of $191,272. At the time of sale, the cost and related accumulated depreciation was $1,231,625 and $91,722, respectively. On June 3, 2009, the Partnership sold its remaining 2.5775% interest in the Marie Callender's restaurant in Henderson, Nevada to an unrelated third party. The Partnership received net sale proceeds of $45,359, which resulted in a net gain of $9,570. The cost and related accumulated depreciation of the interest sold was $44,142 and $8,353, respectively. On September 3, 2009, the Partnership sold 5.5187% of the Winn-Dixie store in Panama City, Florida to an unrelated third party. The Partnership received net sale proceeds of $275,122, which resulted in a net gain of $55,795. The cost and related accumulated depreciation of the interest sold was $255,475 and $36,148, respectively. The Partnership is attempting to sell its remaining 31.4813% interest in the property. At September 30, 2009 and December 31, 2008, the property was classified as Real Estate Held for Sale with a carrying value of $1,251,149 and $1,470,476, respectively. During the first nine months of 2009 and 2008, the Partnership distributed net sale proceeds of $2,345,912 and $3,187,369 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $115.17 and $156.48 per Limited Partnership Unit, respectively. AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (6) Discontinued Operations - (Continued) The financial results for these properties are reflected as Discontinued Operations in the accompanying financial statements. The following are the results of discontinued operations for the periods ended September 30: Three Months Ended Nine Months Ended 9/30/09 9/30/08 9/30/09 9/30/08 Rental Income $ 33,260 $ 87,941 $ 177,343 $ 341,083 Property Management Expenses (198) (637) (5,332) (4,194) Depreciation 0 (23,685) (7,899) (81,778) Gain on Disposal of Real Estate 247,067 0 676,580 584,999 -------- -------- --------- --------- Income from Discontinued Operations $280,129 $ 63,619 $ 840,692 $ 840,110 ======== ======== ========= ========= (7) Fair Value Measurements - The Partnership adopted new guidance for measuring financial assets and liabilities at fair value on a recurring basis on January 1, 2008 and for certain nonfinancial assets and liabilities on January 1, 2009. The Partnership has no assets or liabilities measured at fair value on a recurring basis or nonrecurring basis that would require disclosure under this new guidance. (8) Subsequent Events - The Partnership has evaluated subsequent events through November 10, 2009, the date which the financial statements were available to be issued. Subsequent events, if any, were disclosed in the appropriate note in the Notes to Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section contains "forward-looking statements" which represent management's expectations or beliefs concerning future events, including statements regarding anticipated application of cash, expected returns from rental income, growth in revenue, the sufficiency of cash to meet operating expenses, rates of distribution, and other matters. These, and other forward- looking statements, should be evaluated in the context of a number of factors that may affect the Partnership's financial condition and results of operations, including the following: Market and economic conditions which affect the value of the properties the Partnership owns and the cash from rental income such properties generate; the federal income tax consequences of rental income, deductions, gain on sales and other items and the effects of these consequences for the Partners; resolution by the General Partners of conflicts with which they may be confronted; the effect of tenant defaults; and the condition of the industries in which the tenants of properties owned by the Partnership operate. Application of Critical Accounting Policies The preparation of the Partnership's financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management evaluates these estimates on an ongoing basis, including those related to the carrying value of real estate and the allocation by AEI Fund Management, Inc. of expenses to the Partnership as opposed to other funds they manage. The Partnership purchased properties and recorded them in the financial statements at cost (including capitalized acquisition expenses). The Partnership tests long-lived assets for recoverability when events or changes in circumstances indicate that the carrying value may not be recoverable. For properties the Partnership will hold and operate, management determines whether impairment has occurred by comparing the property's probability-weighted cash flows to its current carrying value. For properties held for sale, management determines whether impairment has occurred by comparing the property's estimated fair value less cost to sell to its current carrying value. If the carrying value is greater than the realizable value, an impairment loss is recorded to reduce the carrying value of the property to its realizable value. Changes in these assumptions or analysis may cause material changes in the carrying value of the properties. AEI Fund Management, Inc. allocates expenses to each of the funds they manage primarily on the basis of the number of hours devoted by their employees to each fund's affairs. They also allocate expenses at the end of each month that are not directly related to a fund's operations based upon the number of investors in the fund and the fund's capitalization relative to other funds they manage. The Partnership reimburses these expenses subject to detailed limitations contained in the Partnership Agreement. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) Results of Operations For the nine months ended September 30, 2009 and 2008, the Partnership recognized rental income from continuing operations of $321,006 and $318,707, respectively. In 2009, rental income increased due to rent increases on two properties. For the nine months ended September 30, 2009 and 2008, the Partnership incurred Partnership administration expenses from affiliated parties of $101,111 and $107,907, respectively. These administration expenses include costs associated with the management of the properties, processing distributions, reporting requirements and communicating with the Limited Partners. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $21,154 and $22,518, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit costs, taxes, insurance and other property costs. In March 2009, Tumbleweed, Inc., the tenant of the Tumbleweed restaurant in Chillicothe, Ohio filed for Chapter 11 bankruptcy reorganization. Rents are current and the Partnership expects to continue to receive all scheduled rents in future months unless the Lease is rejected by Tumbleweed. If the Lease is assumed, Tumbleweed must comply with all Lease terms. If the Lease is rejected, Tumbleweed would be required to return possession of the property to the Partnership and the Partnership would be responsible for real estate taxes and other costs associated with maintaining the property. In July 2009, the tenant contacted the Partnership and offered to assume the Lease and extend the Lease term five years in exchange for a 15% rent reduction. The Partnership accepted this offer and agreed to a Lease Amendment, which is subject to court approval of the tenant's Plan of Reorganization. The Partnership has evaluated the lease and property value and decided that there is no impairment loss at this time. At September 30, 2009, the book value of this property was $390,388. For the nine months ended September 30, 2009 and 2008, the Partnership recognized interest income of $10,403 and $32,013, respectively. In 2008, interest income was higher due to higher money market interest rates in 2008, when compared to 2009, and the Partnership had more money invested in a money market account due to property sales. The majority of the sales proceeds were subsequently distributed to the Partners. Upon complete disposal of a property or classification of a property as Real Estate Held for Sale, the Partnership includes the operating results and sale of the property in discontinued operations. In addition, the Partnership reclassifies the prior periods' operating results of the property to discontinued operations. For the nine months ended September 30, 2009, the Partnership recognized income from discontinued operations of $840,692, representing rental income less property management expenses and depreciation of $164,112 and gain on disposal of real estate of $676,580. For the nine months ended September 30, 2008, the Partnership recognized income from discontinued operations of $840,110, representing rental income less property management expenses and depreciation of $255,111 and gain on disposal of real estate of $584,999. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) In October 2007, the tenant of the Applebee's restaurant in Temple Terrace, Florida exercised its option to purchase the property. On March 20, 2008, the sale closed with the Partnership receiving net proceeds of $193,282 for its 9.0963% interest in the property, which resulted in a net gain of $122,708. At the time of sale, the cost and related accumulated depreciation was $96,262 and $25,688, respectively. During the first quarter of 2008, the Partnership sold its remaining 4.1062% interest in the Eckerd drug store in Auburn, New York, in two separate transactions, to unrelated third parties. The Partnership received total net sale proceeds of $203,264, which resulted in a net gain of $24,346. The cost and related accumulated depreciation of the interests sold was $187,841 and $8,923, respectively. In March 2008, the Partnership entered into an agreement to sell the Johnny Carino's restaurant in Brownsville, Texas to an unrelated third party. On May 15, 2008, the sale closed with the Partnership receiving net proceeds of $2,578,268, which resulted in a net gain of $437,945. At the time of sale, the cost and related accumulated depreciation was $2,322,610 and $182,287, respectively. In February 2009, the Partnership entered into an agreement to sell the Taco Cabana restaurant in San Antonio, Texas to an unrelated third party. On March 13, 2009, the sale closed with the Partnership receiving net proceeds of $1,259,658, which resulted in a net gain of $419,943. At the time of sale, the cost and related accumulated depreciation was $1,147,274 and $307,559, respectively. At December 31, 2008, the property was classified as Real Estate Held for Sale with a carrying value of $839,715. In May 2009, the Partnership entered into an agreement to sell the Tractor Supply Company retail store in Mesquite, Texas to an unrelated third party. On July 2, 2009, the sale closed with the Partnership receiving net proceeds of $1,331,175, which resulted in a net gain of $191,272. At the time of sale, the cost and related accumulated depreciation was $1,231,625 and $91,722, respectively. On June 3, 2009, the Partnership sold its remaining 2.5775% interest in the Marie Callender's restaurant in Henderson, Nevada to an unrelated third party. The Partnership received net sale proceeds of $45,359, which resulted in a net gain of $9,570. The cost and related accumulated depreciation of the interest sold was $44,142 and $8,353, respectively. On September 3, 2009, the Partnership sold 5.5187% of the Winn-Dixie store in Panama City, Florida to an unrelated third party. The Partnership received net sale proceeds of $275,122, which resulted in a net gain of $55,795. The cost and related accumulated depreciation of the interest sold was $255,475 and $36,148, respectively. The Partnership is attempting to sell its remaining 31.4813% interest in the property. At September 30, 2009 and December 31, 2008, the property was classified as Real Estate Held for Sale with a carrying value of $1,251,149 and $1,470,476, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) In the third quarter of 2006, the Partnership decided to discontinue the reinvestment of proceeds from property sales in additional properties. As a result, the Partnership's rental income and operating income will decrease in the future as the Partnership sells its remaining properties. Management believes inflation has not significantly affected income from operations. Leases may contain rent increases, based on the increase in the Consumer Price Index over a specified period, which will result in an increase in rental income over the term of the leases. Inflation also may cause the real estate to appreciate in value. However, inflation and changing prices may have an adverse impact on the operating margins of the properties' tenants, which could impair their ability to pay rent and subsequently reduce the Net Cash Flow available for distributions. Liquidity and Capital Resources During the nine months ended September 30, 2009, the Partnership's cash balances increased $1,831,948 as a result of cash generated from the sale of property, which was partially offset by distributions paid to the Partners in excess of cash generated from operating activities. During the nine months ended September 30, 2008, the Partnership's cash balances decreased $1,377,311 as a result of distributions paid to the Partners in excess of cash generated from operating and investing activities. Net cash provided by operating activities decreased from $509,320 in 2008 to $371,343 in 2009 as the result of a decrease in total rental and interest income in 2009, which was partially offset by a decrease in Partnership administration and property management expenses in 2009 and net timing differences in the collection of payments from the tenants and the payment of expenses. During the nine months ended September 30, 2009 and 2008, the Partnership generated cash flow from the sale of real estate of $2,911,314 and $2,974,814, respectively. The Partnership's primary use of cash flow is distribution payments to Partners. The Partnership declares its regular quarterly distributions before the end of each quarter and pays the distribution in the first week after the end of each quarter. The Partnership attempts to maintain a stable distribution rate from quarter to quarter. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued) For the nine months ended September 30, 2009 and 2008, the Partnership declared distributions of $2,727,067 and $3,744,552, respectively, which were distributed 99% to the Limited Partners and 1% to the General Partners. The Limited Partners received distributions of $2,699,796 and $3,707,107 and the General Partners received distributions of $27,271 and $37,445 for the periods, respectively. In June and September 2009, the Partnership declared special distributions of net sale proceeds of $1,010,101 and $1,313,131, respectively. In September 2008, the Partnership declared a special distribution of net sale proceeds of $3,030,303, which resulted in higher distributions in 2008. In 2009, regular distributions were lower due to decreases in the distribution rate per Unit, effective July 1, 2008 and January 1, 2009. In addition, the regular distributions in 2009 were paid on a capital balance that was reduced by the special distribution of net sale proceeds in September 2008. During the first nine months of 2009 and 2008, the Partnership distributed net sale proceeds of $2,345,912 and $3,187,369 to the Limited and General Partners as part of their quarterly distributions, which represented a return of capital of $115.17 and $156.48 per Limited Partnership Unit, respectively. The continuing rent payments from the properties, together with cash generated from property sales, should be adequate to fund continuing distributions and meet other Partnership obligations on both a short-term and long-term basis. The Economy and Market Conditions The impact of conditions in the current economy, including the turmoil in the credit markets, has adversely affected many real estate companies. However, the absence of mortgage financing on the Partnership's properties eliminates the risks of foreclosure and debt-refinancing that can negatively impact the value and distributions of leveraged real estate companies. Nevertheless, a prolonged economic downturn may adversely affect the operations of the Partnership's tenants and their cash flows. If a tenant were to default on its lease obligations, the Partnership's income would decrease, its distributions would likely be reduced and the value of its properties might decline. At the beginning of 2008, the Partnership anticipated that it would sell its remaining properties and liquidate by the end of 2009, depending on market conditions among other things. Beginning in the fourth quarter of 2008, general economic conditions caused the volume of property sales to slow dramatically for all real estate sellers. As a result, it is unlikely that the Partnership will be able to sell its remaining properties in 2009. Until the economic conditions improve, it is difficult to estimate when the Partnership may be able to sell its remaining properties and liquidate. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not required for a smaller reporting company. ITEM 4. CONTROLS AND PROCEDURES. (a) Disclosure Controls and Procedures. Under the supervision and with the participation of management, including its President and Chief Financial Officer, the Managing General Partner of the Partnership evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, the President and Chief Financial Officer of the Managing General Partner concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to management, including the President and Chief Financial Officer of the Managing General Partner, in a manner that allows timely decisions regarding required disclosure. (b) Changes in Internal Control Over Financial Reporting. During the most recent period covered by this report, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. There are no material pending legal proceedings to which the Partnership is a party or of which the Partnership's property is subject. ITEM 1A. RISK FACTORS. Not required for a smaller reporting company. PART II - OTHER INFORMATION (Continued) ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. (a) None. (b) Not applicable. (c) Pursuant to Section 7.7 of the Partnership Agreement, each Limited Partner has the right to present Units to the Partnership for purchase by submitting notice to the Managing General Partner during September of each year. The purchase price of the Units is based on a formula specified in the Partnership Agreement. As of December 31, 2007, the formula results in a purchase price of $-0-. Therefore, the Partnership will no longer purchase Units from Limited Partners under this provision of the Partnership Agreement. During the period covered by this report, the Partnership did not purchase any Units by any other arrangement. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS. 31.1 Certification of Chief Executive Officer of General Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer of General Partner pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Chief Executive Officer and Chief Financial Officer of General Partner pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 10, 2009 AEI Net Lease Income & Growth Fund XIX Limited Partnership By: AEI Fund Management XIX, Inc. Its: Managing General Partner By: /s/ ROBERT P JOHNSON Robert P. Johnson President (Principal Executive Officer) By: /s/ PATRICK W KEENE Patrick W. Keene Chief Financial Officer (Principal Accounting Officer