SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: June 30, 1997
Commission file number: 0-16555
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1571166
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 1997 and December 31, 1996
Statements for the Periods ended June 30, 1997 and 1996:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
CURRENT ASSETS:
Cash and Cash Equivalents $ 685,131 $ 645,302
Receivables 37,468 17,284
----------- -----------
Total Current Assets 722,599 662,586
------------ -----------
INVESTMENTS IN REAL ESTATE:
Land 3,446,635 3,446,635
Buildings and Equipment 6,590,448 6,590,448
Construction Advances 701,662 701,662
Property Acquisition Costs 11,481 20,933
Accumulated Depreciation (2,283,924) (2,148,068)
----------- -----------
8,466,302 8,611,610
Real Estate Held for Sale 253,747 403,073
----------- -----------
Net Investments in Real Estate 8,720,049 9,014,683
----------- -----------
Total Assets $ 9,442,648 $ 9,677,269
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 49,314 $ 102,082
Distributions Payable 176,100 190,647
Security Deposit 26,897 0
Deferred Income 35,620 22,212
----------- -----------
Total Current Liabilities 287,931 314,941
----------- -----------
DEFERRED INCOME - Net of Current Portion 210,875 221,981
PARTNERS' CAPITAL (DEFICIT):
General Partners (39,759) (37,794)
Limited Partners, $1,000 Unit value;
15,000 Units authorized and issued;
13,995 Units outstanding 8,983,601 9,178,141
----------- -----------
Total Partners' Capital 8,943,842 9,140,347
----------- -----------
Total Liabilities and Partners' Capital $ 9,442,648 $ 9,677,269
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Three Months Ended Six Months Ended
6/30/97 6/30/96 6/30/97 6/30/96
INCOME:
Rent $ 217,005 $ 228,362 $ 451,824 $ 513,452
Investment Income 23,625 16,473 44,097 40,765
--------- --------- --------- ---------
Total Income 240,630 244,835 495,921 554,217
--------- --------- --------- ---------
EXPENSES:
Partnership Administration-
Affiliates 58,340 40,045 100,016 104,070
Partnership Administration
and Property Management -
Unrelated Parties 26,407 42,039 48,474 85,450
Depreciation 67,958 73,132 135,980 143,478
--------- --------- --------- ---------
Total Expenses 152,705 155,216 284,470 332,998
--------- --------- --------- ---------
OPERATING INCOME 87,925 89,619 211,451 221,219
GAIN (ADJUSTMENT) ON SALE
OF REAL ESTATE 0 (2,306) 0 284,690
--------- --------- --------- ---------
NET INCOME $ 87,925 $ 87,313 $ 211,451 $ 505,909
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 879 $ 873 $ 2,114 $ 5,059
Limited Partners 87,046 86,440 209,337 500,850
--------- --------- --------- ---------
$ 87,925 $ 87,313 $ 211,451 $ 505,909
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(13,995 and 14,108 weighted average
Units outstanding in 1997 and 1996,
respectively) $ 6.22 $ 6.13 $ 14.96 $ 35.50
========= ========= ======== =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 211,451 $ 505,909
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating Activities:
Depreciation 135,980 143,478
Gain on Sale of Real Estate 0 (284,690)
(Increase) Decrease in Receivables (20,184) 9,947
Decrease in Payable to
AEI Fund Management, Inc. (52,768) (60,259)
Increase in Security Deposit 26,897 0
Increase (Decrease) in Deferred Income 2,302 (2,560)
----------- -----------
Total Adjustments 92,227 (194,084)
----------- -----------
Net Cash Provided By
Operating Activities 303,678 311,825
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate 9,452 (1,320,742)
Proceeds from Sale of Real Estate 149,202 1,051,744
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 158,654 (268,998)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease)in Distributions Payable (14,547) 397
Distributions to Partners (407,956) (424,243)
----------- -----------
Net Cash Used For
Financing Activities (422,503) (423,846)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 39,829 (381,019)
CASH AND CASH EQUIVALENTS, beginning of period 645,302 1,873,834
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 685,131 $ 1,492,815
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1995 $ (33,570) $ 9,596,268 $ 9,562,698 14,107.70
Distributions (4,243) (420,000) (424,243)
Net Income 5,059 500,850 505,909
---------- ----------- ----------- ----------
BALANCE, June 30, 1996 $ (32,754) $ 9,677,118 $ 9,644,364 14,107.70
========== =========== =========== ==========
BALANCE, December 31, 1996 $ (37,794) $ 9,178,141 $ 9,140,347 13,994.70
Distributions (4,079) (403,877) (407,956)
Net Income 2,114 209,337 211,451
---------- ----------- ----------- ----------
BALANCE, June 30, 1997 $ (39,759) $ 8,983,601 $ 8,943,842 13,994.70
========== =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, 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 Partnership
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
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund XVI Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVI, Inc. (AFM), the Managing General
Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner of the Partnership. An affiliate
of AFM, AEI Fund Management, Inc. (AEI), performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on February 6, 1987 when minimum
subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated on November 6, 1987 when the maximum subscription
limit of 15,000 Limited Partnership Units ($15,000,000) was
reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$15,000,000 and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's 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 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those Partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% to the General Partners. Losses will be allocated 98%
to the Limited Partners and 2% to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the Partnership
or withdrawal by a General Partner, the General Partners
will contribute to the Partnership an amount equal to the
lesser of the deficit balances in their capital accounts or
1% of total Limited Partners' and General Partners' capital
contributions.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
In July, 1996, the Partnership entered into an agreement to
sell the J.T. McCord's in Mesquite, Texas to an unrelated
third party. In September, 1996, the Agreement was
terminated by the purchaser. The property was listed for
sale or lease until March, 1997 when it was re-leased to
Texas Sports City Cafe, Ltd. under a triple net lease
agreement with a primary term of 12 years which may be
renewed for up to two consecutive five-year periods. The
Partnership's share of the annual base rent is $17,500 for
the first lease year and $31,500 for the second lease year,
with rent increases in each subsequent lease year of either
three percent of the prior year's rent or three percent of
gross receipts in years two and three and six percent of
gross receipts thereafter, to the extent they exceed the
base rent.
In July 1995, the lessee of the Super 8 Motel in Hot
Springs, Arkansas, exercised an option in the Lease
Agreement to purchase the property. On March 29, 1996, the
sale closed with the Partnership receiving net sale proceeds
of $665,692 which resulted in a net gain of $217,323. In
the second quarter of 1996, $2,306 of additional sale
expenses were recognized which resulted in a total net gain
of $215,017. The Partnership recognized $18,534 of this
gain in 1995 due to nonrefundable deposits received from the
purchaser. At the time of sale, the cost and related
accumulated depreciation of the property was $583,653 and
$135,284, respectively.
In January, 1996, the Cheddar's restaurant in Indianapolis,
Indiana was destroyed by a fire. The Partnership reached an
agreement with the tenant and insurance company which calls
for termination of the Lease, demolition of the building and
payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not
be rebuilt and the Partnership listed the land for sale.
The Partnership recognized net disposition proceeds of
$406,892 which resulted in a net gain of $88,207. At the
time of disposition, the cost and related accumulated
depreciation was $496,967 and $178,282, respectively. The
Partnership's cost of the land is $253,747.
During the first six months of 1997 and the year 1996, the
Partnership distributed $71,631 and $699,791 of the net sale
proceeds to the Limited and General Partners as part of
their regular quarterly distributions, which represented a
return of capital of $5.07 and $49.17 per Limited
Partnership Unit, respectively. The majority of the
remaining net proceeds will be reinvested in additional
properties.
In November, 1995, the Partnership entered into an Agreement
to purchase an Applebee's restaurant in Victoria, Texas.
The property was acquired on March 22, 1996 for $1,335,555.
The property is leased to Renaissant Development Corporation
under a Lease Agreement with a primary term of 20 years and
annual rental payments of approximately $151,000.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
purchase price will be approximately $1,231,000. The
property will be leased to Caribou Coffee Company, Inc.
under a Lease Agreement with a primary term of 18 years and
annual rental payments of approximately $141,500. Through
June 30, 1997, the Partnership had advanced $701,662 for the
construction of the property and was charging interest on
the Note at the rate of 7.0%. Effective June 1, 1997, the
interest rate was increased to 11.5%. The Partnership has
incurred net costs of $11,481 related to the acquisition of
the property. The costs have been capitalized and will be
allocated to land, building and equipment.
The Partnership owned a 30.8078% interest in a Sizzler
restaurant at the King's Island Theme Park near Cincinnati,
Ohio. In January, 1994, the Partnership closed the
restaurant and listed it for sale or lease. On January 23,
1997, the Partnership sold its interest in the property to
an unrelated third party. The Partnership received net sale
proceeds of $149,202, which resulted in a net loss of
$216,300, which was recognized as a real estate impairment
in the fourth quarter of 1996. Prior to the sale, the
Partnership was responsible for the real estate taxes and
other costs required to maintain the property. No rent was
received in 1997 or 1996 from the property. At December 31,
1996, the property was classified on the balance sheet as
Real Estate Held for Sale.
(4) Payable to AEI Fund Management -
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.
(5) Deferred Income -
In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor, acquired the operations of the Fuddruckers
restaurants in St. Louis, Missouri and Omaha, Nebraska, and
assumed the lease obligations from the original lessee. As
part of the agreement, the Partnership amended the Leases to
reduce the base rent from the current annual rent of
$109,033 to $92,164 for the St. Louis property and $167,699
to $145,081 for the Omaha property. The Partnership could
receive additional rent in the future if 10% of gross
receipts from the properties exceed the base rent. In
consideration for the lease assumption and amendment, the
Partnership received a lump sum payment from the original
lessee of $299,723. The lump sum payment will be recognized
as income over the remainder of the Lease terms which expire
January 31, 2008 and November 30, 2007, using the straight
line method. As of June 30, 1997 and December 31, 1996, the
Partnership has recognized $66,636 and $55,530 of this
payment as income. At June 30, 1997, the remaining deferred
income of $13,408 was prepaid rent related to certain other
Partnership properties.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Security Deposit -
In May, 1997, the Partnership received a deposit from the
tenant of the Texas Sport City Cafe as security for
construction improvements being made by the tenant. The
funds are invested in a short term money market account and
will be returned to the lessee, without interest, within ten
(10) days after written notification of satisfactory
completion of the work.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the six months ended June 30, 1997 and 1996, the
Partnership recognized rental income of $451,824 and $513,452,
respectively. During the same periods, the Partnership earned
investment income of $44,097 and $40,765, respectively. In 1997,
rental income decreased mainly as a result of the property sales
discussed below. The decrease in rental income was partially
offset by rental income received from the Applebee's in Victoria,
Texas.
In July, 1996, the Partnership entered into an agreement
to sell the J.T. McCord's in Mesquite, Texas to an unrelated
third party. In September, 1996, the Agreement was terminated by
the purchaser. The property was listed for sale or lease until
March, 1997 when it was re-leased to Texas Sports City Cafe, Ltd.
under a triple net lease agreement with a primary term of 12
years which may be renewed for up to two consecutive five-year
periods. The Partnership's share of the annual base rent is
$17,500 for the first lease year and $31,500 for the second lease
year, with rent increases in each subsequent lease year of either
three percent of the prior year's rent or three percent of gross
receipts in years two and three and six percent of gross receipts
thereafter, to the extent they exceed the base rent.
The Partnership owned a 30.8078% interest in a Sizzler
restaurant at the King's Island Theme Park near Cincinnati, Ohio.
In January, 1994, the Partnership closed the restaurant and
listed it for sale or lease. On January 23, 1997, the
Partnership sold its interest in the property to an unrelated
third party. The Partnership received net sale proceeds of
$149,202, which resulted in a net loss of $216,300, which was
recognized as a real estate impairment in the fourth quarter of
1996. Prior to the sale, the Partnership was responsible for the
real estate taxes and other costs required to maintain the
property. No rent was received in 1997 or 1996 from the
property. At December 31, 1996, the property was classified on
the balance sheet as Real Estate Held for Sale.
During the six months ended June 30, 1997 and 1996, the
Partnership paid Partnership administration expenses to
affiliated parties of $100,016 and $104,070, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same periods, the Partnership incurred partnership
administration and property management expenses from unrelated
parties of $48,474 and $85,450, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs. The decrease
in these expenses in 1997, when compared to 1996, is mainly the
result of expenses incurred in 1996 related to the J.T. McCord's
properties.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
As of June 30, 1997, the Partnership's annualized cash
distribution rate was 6.0%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions
were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of the
tenants, due to inflation and real sales growth, will result in
an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
Liquidity and Capital Resources
During the six months ended June 30, 1997, the
Partnership's cash balances increased $39,829 as a result of net
proceeds received from the sale of the Sizzler property which
were partially offset by distributions made in excess of cash
generated from operating activities. Net cash provided by
operating activities decreased from $311,825 in 1996 to $303,678
in 1997 mainly as a result of a decrease in rental income in
1997, which was partially offset by a decrease in expenses in
1997.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. For the six months ended June30,
1997 and 1996, the Partnership generated cash flow from the sale
of real estate of $149,202 and $1,051,744, respectively. During
1996, the Partnership expended $1,320,742 to invest in real
properties (inclusive of acquisition expenses) as the Partnership
reinvested the cash generated from the property sales.
In July 1995, the lessee of the Super 8 Motel in Hot
Springs, Arkansas, exercised an option in the Lease Agreement to
purchase the property. On March 29, 1996, the sale closed with
the Partnership receiving net sale proceeds of $665,692 which
resulted in a net gain of $217,323. In the second quarter of
1996, $2,306 of additional sale expenses were recognized which
resulted in a total net gain of $215,017. The Partnership
recognized $18,534 of this gain in 1995 due to nonrefundable
deposits received from the purchaser. At the time of sale, the
cost and related accumulated depreciation of the property was
$583,653 and $135,284, respectively.
In January, 1996, the Cheddar's restaurant in
Indianapolis, Indiana was destroyed by a fire. The Partnership
reached an agreement with the tenant and insurance company which
calls for termination of the Lease, demolition of the building
and payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not be
rebuilt and the Partnership listed the land for sale. The
Partnership recognized net disposition proceeds of $406,892 which
resulted in a net gain of $88,207. At the time of disposition,
the cost and related accumulated depreciation was $496,967 and
$178,282, respectively. The Partnership's cost of the land is
$253,747.
During the first six months of 1997 and the year 1996, the
Partnership distributed $71,631 and $699,791 of the net sale
proceeds to the Limited and General Partners as part of their
regular quarterly distributions, which represented a return of
capital of $5.07 and $49.17 per Limited Partnership Unit,
respectively. The majority of the remaining net proceeds will be
reinvested in additional properties.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In November, 1995, the Partnership entered into an
agreement to purchase an Applebee's restaurant in Victoria,
Texas. The property was acquired on March 22, 1996 for
$1,335,555. The property is leased to Renaissant Development
Corporation under a Lease Agreement with a primary term of 20
years and annual rental payments of approximately $151,000.
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
purchase price will be approximately $1,231,000. The property
will be leased to Caribou Coffee Company, Inc. under a Lease
Agreement with a primary term of 18 years and annual rental
payments of approximately $141,500. Through June 30, 1997, the
Partnership had advanced $701,662 for the construction of the
property and was charging interest on the Note at the rate of
7.0%. Effective June 1, 1997, the interest rate was increased to
11.5%. The Partnership has incurred net costs of $11,481 related
to the acquisition of the property. The costs have been
capitalized and will be allocated to land, building and
equipment.
The Partnership's primary use of cash flow is distribution
and redemption 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. Redemption payments
are paid to redeeming Partners in the fourth quarter of each
year. Effective April 1, 1997, the Partnership's distribution
rate was reduced from 6.5% to 6.0%. As a result, distributions
during 1996 were higher when compared to the same period in 1997.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
During 1996, thirteen Limited Partners redeemed a total of
113 Partnership Units for $69,640 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
seventy-seven Limited Partners redeemed 892.3 Partnership Units
for $715,655. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
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 2. CHANGES IN SECURITIES
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
27 Financial Data Schedule for period
ended June 30, 1997.
b. Reports filed on Form 8-K -
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: August 5, 1997 AEI Real Estate Fund XVI
Limited Partnership
By: AEI Fund Management XVI, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000804127
<NAME> AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 685,131
<SECURITIES> 0
<RECEIVABLES> 37,468
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 722,599
<PP&E> 11,003,973
<DEPRECIATION> (2,283,924)
<TOTAL-ASSETS> 9,442,648
<CURRENT-LIABILITIES> 287,931
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,943,842
<TOTAL-LIABILITY-AND-EQUITY> 9,442,648
<SALES> 0
<TOTAL-REVENUES> 495,921
<CGS> 0
<TOTAL-COSTS> 284,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 211,451
<INCOME-TAX> 0
<INCOME-CONTINUING> 211,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 211,451
<EPS-PRIMARY> 14.96
<EPS-DILUTED> 14.96
</TABLE>
