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: September 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 September 30, 1997 and December 31, 1996
Statements for the Periods ended September 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
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(Unaudited)
ASSETS
1997 1996
CURRENT ASSETS:
Cash and Cash Equivalents $ 197,455 $ 645,302
Receivables 9,305 17,284
----------- -----------
Total Current Assets 206,760 662,586
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,068,050 3,446,635
Buildings and Equipment 7,216,604 6,590,448
Construction Advances 0 701,662
Property Acquisition Costs 0 20,933
Accumulated Depreciation (2,352,053) (2,148,068)
------------ -----------
8,932,601 8,611,610
Real Estate Held for Sale 253,747 403,073
----------- -----------
Net Investments in Real Estate 9,186,348 9,014,683
----------- -----------
Total Assets $ 9,393,108 $ 9,677,269
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 74,993 $ 102,082
Distributions Payable 175,487 190,647
Security Deposit 26,897 0
Deferred Income 44,626 22,212
----------- -----------
Total Current Liabilities 322,003 314,941
----------- -----------
DEFERRED INCOME - Net of Current Portion 205,322 221,981
PARTNERS' CAPITAL (DEFICIT):
General Partners (40,540) (37,794)
Limited Partners, $1,000 Unit value;
15,000 Units authorized and issued;
13,995 Units outstanding 8,906,323 9,178,141
----------- -----------
Total Partners' Capital 8,865,783 9,140,347
----------- -----------
Total Liabilities and Partners' Capital $ 9,393,108 $ 9,677,269
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/97 9/30/96 9/30/97 9/30/96
INCOME:
Rent $ 246,879 $ 225,386 $ 698,703 $ 738,838
Investment Income 14,910 18,287 59,007 59,052
--------- --------- --------- ---------
Total Income 261,789 243,673 757,710 797,890
--------- --------- --------- ---------
EXPENSES:
Partnership Administration-
Affiliates 52,797 53,563 152,813 157,633
Partnership Administration
and Property Management -
Unrelated Parties 23,769 27,599 72,243 113,049
Depreciation 68,129 73,123 204,109 216,601
--------- --------- --------- ---------
Total Expenses 144,695 154,285 429,165 487,283
--------- --------- --------- ---------
OPERATING INCOME 117,094 89,388 328,545 310,607
GAIN ON SALE OF REAL ESTATE 0 0 0 284,690
--------- --------- --------- ---------
NET INCOME $ 117,094 $ 89,388 $ 328,545 $ 595,297
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 1,171 $ 894 $ 3,285 $ 5,953
Limited Partners 115,923 88,494 325,260 589,344
--------- --------- --------- ---------
$ 117,094 $ 89,388 $ 328,545 $ 595,297
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(13,995 and 14,108 weighted average
Units outstanding in 1997 and 1996,
respectively) $ 8.28 $ 6.27 $ 23.24 $ 41.77
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 328,545 $ 595,297
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating Activities:
Depreciation 204,109 216,601
Gain on Sale of Real Estate 0 (284,690)
Decrease in Receivables 7,979 17,647
Decrease in Payable to
AEI Fund Management, Inc. (27,089) (35,522)
Increase in Security Deposit 26,897 0
Increase (Decrease) in Deferred Income 5,755 (4,052)
----------- -----------
Total Adjustments 217,651 (90,016)
----------- -----------
Net Cash Provided By
Operating Activities 546,196 505,281
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (524,976) (1,333,690)
Proceeds from Sale of Real Estate 149,202 1,051,744
----------- -----------
Net Cash Used For
Investing Activities (375,774) (281,946)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable (15,160) 397
Distributions to Partners (603,109) (636,363)
----------- -----------
Net Cash Used For
Financing Activities (618,269) (635,966)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (447,847) (412,631)
CASH AND CASH EQUIVALENTS, beginning of period 645,302 1,873,834
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 197,455 $ 1,461,203
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 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 (6,364) (629,999) (636,363)
Net Income 5,953 589,344 595,297
--------- ----------- ----------- ----------
BALANCE, September 30, 1996 $ (33,981) $ 9,555,613 $ 9,521,632 14,107.70
========= =========== =========== ==========
BALANCE, December 31, 1996 $ (37,794) $ 9,178,141 $ 9,140,347 13,994.70
Distributions (6,031) (597,078) (603,109)
Net Income 3,285 325,260 328,545
--------- ----------- ----------- ----------
BALANCE, September 30, 1997 $ (40,540) $ 8,906,323 $ 8,865,783 13,994.70
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 $663,386 which resulted in a 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 CheddarOs 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
PartnershipOs cost of the land is $253,747.
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 first nine 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 were reinvested in two additional
properties.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In November, 1995, the Partnership entered into an Agreement
to purchase an ApplebeeOs 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 $151,110.
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
property was acquired on August 15, 1997 for $1,247,571.
The property is leased to Caribou Coffee Company, Inc. under
a Lease Agreement with a primary term of 18 years and annual
rental payments of $142,025.
In October, 1997, the Partnership received an offer of
$792,500 to sell the J.T. McCord's restaurant in Irving,
Texas. The sale is contingent upon the completion of the
purchaser's due diligence and, pending the outcome of that
due diligence, is expected to close in December, 1997, or
January, 1998. The restaurant was purchased by the
Partnership in December, 1987 for $1,147,333. If the
transaction is consummated, the Partnership will incur a
loss of approximately $104,000, or approximately $7.34 per
Unit outstanding.
(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 September 30, 1997 and December 31,
1996, the Partnership has recognized $72,189 and $55,530 of
this payment as income. At September 30, 1997, the
remaining deferred income of $22,414 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
days after written notification of satisfactory completion
of the work. In October, 1997, the Partnership returned the
deposit to the lessee.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 1997 and 1996, the
Partnership recognized rental income of $698,703 and $738,838,
respectively. During the same periods, the Partnership earned
investment income of $59,007 and $59,052, 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, and the Caribou Coffee in Atlanta, Georgia.
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 nine months ended September 30, 1997 and 1996,
the Partnership paid Partnership administration expenses to
affiliated parties of $152,813 and $157,633, 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 $72,243 and $113,049, 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 September 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 nine months ended September 30, 1997, the
Partnership's cash balances decreased $447,847 mainly as a result
of reinvesting net sale proceeds in an additional property, as
discussed below. Net cash provided by operating activities
increased from $505,281 in 1996 to $546,196 in 1997 mainly as a
result of net timing differences in the collection of payments
from the lessees and the payment of expenses.
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 nine months ended
September30, 1997 and 1996, the Partnership generated cash flow
from the sale of real estate of $149,202 and $1,051,744,
respectively. During the same periods, the Partnership expended
$524,976 and $1,333,690, respectively, 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 $663,386 which
resulted in a 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 CheddarOs 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 PartnershipOs cost of the land is
$253,747.
During the first nine 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 were
reinvested in two 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 $151,110.
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
property was acquired on August 15, 1997 for $1,247,571. The
property is leased to Caribou Coffee Company, Inc. under a Lease
Agreement with a primary term of 18 years and annual rental
payments of $142,025.
In October, 1997, the Partnership received an offer of
$792,500 to sell the J.T. McCord's restaurant in Irving, Texas.
The sale is contingent upon the completion of the purchaser's due
diligence and, pending the outcome of that due diligence, is
expected to close in December, 1997, or January, 1998. The
restaurant was purchased by the Partnership in December, 1987 for
$1,147,333. If the transaction is consummated, the Partnership
will incur a loss of approximately $104,000, or approximately
$7.34 per Unit outstanding.
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.
On October 1, 1997, eleven Limited Partners redeemed a
total of 75.3 Partnership Units for $44,105 in accordance with
the Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
ninety Limited Partners redeemed 1,005.3 Partnership Units for
$785,296. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties 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.
PART II - OTHER INFORMATION
(Continued)
ITEM 2. CHANGES IN SECURITIES
None.
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
10.1 Purchase Agreement dated October 24,
1997, between the Partnership and
Spaghetti Warehouse of Texas, L.P.
relating to the property at 2849 W.
Airport Freeway, Irving, Texas.
27 Financial Data Schedule for period
ended September 30, 1997.
b. Reports filed on Form 8-K -
During the quarter ended September
30, 1997, the Partnership filed a
Form 8-K, dated August 21, 1997,
reporting the acquisition of a
Caribou Coffee restaurant in
Marietta, Georgia.
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: November 7, 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)