SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549

                           FORM 10-KSB

             Annual Report Under Section 13 or 15(d)
             Of The Securities Exchange Act Of 1934

          For the Fiscal Year Ended:  December 31, 1999

                Commission file number:  0-16555

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
         (Name of Small Business Issuer 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)

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

Securities registered pursuant to Section 12(b) of the Act:

                                 Name of each exchange on
     Title of each class             which registered
             None                          None

Securities registered pursuant to Section 12(g) of the Act:

                      Limited Partnership Units
                        (Title of class)

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 past 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

Check if disclosure of delinquent filers in response to Rule  405
of  Regulation  S-B  is  not  contained  in  this  Form,  and  no
disclosure  will  be contained, to the best of  the  registrant's
knowledge,   in   definitive  proxy  or  information   statements
incorporated by reference in Part III of this Form 10-KSB or  any
amendment to this Form 10-KSB. [X]

The  Issuer's  revenues  for year ended December  31,  1999  were
$1,109,240.

As  of  February 29, 2000, there were 13,468.15 Units of  limited
partnership interest in the registrant outstanding and  owned  by
nonaffiliates  of  the registrant, which Units had  an  aggregate
market  value (based solely on the price at which they were  sold
since there is no ready market for such Units) of $13,468,150.

               DOCUMENTS INCORPORATED BY REFERENCE

 The registrant has not incorporated any documents by reference
                        into this report.

         Transitional Small Business Disclosure Format:

                         Yes        No [X]

                             PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

         AEI  Real  Estate  Fund  XVI  Limited  Partnership  (the
"Partnership" or the "Registrant") is a limited partnership which
was  organized pursuant to the laws of the State of Minnesota  on
February  6,  1987.   The  registrant is comprised  of  AEI  Fund
Management XVI, Inc. (AFM) as Managing General Partner, Robert P.
Johnson  as  the  Individual General Partner, and  purchasers  of
partnership  units as Limited Partners.  The Partnership  offered
for  sale up to $15,000,000 of limited partnership interests (the
"Units")  (15,000  Units  at  $1,000  per  Unit)  pursuant  to  a
registration   statement  effective  December  15,   1986.    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 November 6,
1987  when  the  maximum  subscription limit  of  15,000  Limited
Partnership Units ($15,000,000) was reached.

        The Partnership was organized to acquire, initially on  a
debt-free   basis,  existing  and  newly  constructed  commercial
properties located in the United States, to lease such properties
to  tenants under triple net leases, to hold such properties  and
to  eventually sell such properties.  From subscription proceeds,
the  Partnership  purchased twenty properties, including  partial
interests  in  eleven  properties,  totaling  $12,910,857.    The
balance  of the subscription proceeds was applied to organization
and    syndication   costs,   working   capital   reserves    and
distributions,  which  represented  a  return  of  capital.   The
properties  are  all commercial, single tenant  buildings  leased
under triple net leases.

       The Partnership will hold its properties until the General
Partners  determine  that the sale or other  disposition  of  the
properties   is   advantageous  in  view  of  the   Partnership's
investment  objectives.  In deciding whether to sell  properties,
the  General  Partners will consider factors  such  as  potential
appreciation,  net  cash flow and income tax considerations.   In
addition,  certain lessees have been granted options to  purchase
properties  after  a  specified portion of  the  lease  term  has
elapsed.   At  any  time  prior to selling  the  properties,  the
Partnership may mortgage one or more of its properties in amounts
not  exceeding  50%  of  the  of the fair  market  value  of  the
property.

Leases

       Although there are variations in the specific terms of the
leases,  the following is a summary of the general terms  of  the
Partnership's  leases.   The properties  are  leased  to  various
tenants  under  triple  net  leases,  which  are  classified   as
operating  leases.   Under  a triple net  lease,  the  lessee  is
responsible  for  all real estate taxes, insurance,  maintenance,
repairs  and  operating expenses for the property.   The  initial
lease terms are for 10 to 20 years.  The leases provide for  base
annual  rental  payments,  payable in monthly  installments,  and
contain  rent  clauses which entitle the Partnership  to  receive
additional rent in future years based on stated rent increases or
if  gross  receipts  for  the property exceed  certain  specified
amounts, among other conditions.

        Most  of the leases provide the lessee with two to  three
five-year   renewal  options  subject  to  the  same  terms   and
conditions  as  the  initial lease.  Certain  lessees  have  been
granted  options  to  purchase the property.   Depending  on  the
lease,  the purchase price is either determined by a formula,  or
is  the  greater of the fair market value of the property or  the
amount determined by a formula.  In all cases, if the option were
to  be  exercised  by  the lessee, the purchase  price  would  be
greater than the original cost of the property.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

        The  Partnership owns a 35% interest in a  J.T.  McCord's
restaurant  in  Mesquite, Texas and a 100%  interest  in  a  J.T.
McCord's  restaurant  in Irving, Texas.  In December,  1995,  the
Partnership  took possession of the properties after  the  lessee
was  unable to perform under the terms of the Lease.   In  March,
1997,  the  restaurant in Mesquite was re-leased to Texas  Sports
City Cafe, Ltd. (Texas) under a triple net lease agreement with a
primary  term of 12 years.  In January, 2000, Texas notified  the
Partnership   that   they  were  discontinuing   the   restaurant
operations.  The Partnership is negotiating to sell the  property
for  $900,000 to an unrelated third party, whom has  assumed  the
restaurant operations from Texas.  The Partnership's share of the
sale  proceeds would be $315,000.  In the fourth quarter of 1999,
a  charge to operations of $70,000 was recognized for real estate
impairment,  which was the difference between the book  value  at
December 31, 1999 of $381,254 and the estimated net proceeds from
the  sale.   The  charge was recorded against  the  cost  of  the
building.   The  land and building have been classified  as  Real
Estate Held for Sale at December 31, 1999.

        On  December  22,  1997, the Partnership  sold  the  J.T.
McCord's restaurant in Irving, Texas to an unrelated third party.
The  Partnership  received net sales proceeds of  $741,635  which
resulted  in  a net loss of $109,144.  At the time of  sale,  the
cost  and  related accumulated depreciation of the  property  was
$1,147,333 and $296,554, respectively.  While the properties were
being re-leased or sold, the Partnership was responsible for  the
real  estate  taxes  and  other costs required  to  maintain  the
properties.

        The Partnership owned a 55.0958% interest in a restaurant
in  Waco, Texas, which was previously closed.  In June 1995,  the
Partnership re-leased the restaurant to Tex-Mex Cocina  of  Waco,
L.C.   The Lease Agreement had a primary term of eighteen  months
with an annual rental payment of $29,752.  In December, 1997, the
lessee  elected not to exercise the renewal option in the  lease.
The  restaurant was closed and listed for sale or  lease.   While
the  property was vacant, the Partnership was responsible for the
real  estate  taxes  and  other costs required  to  maintain  the
property.

        As  of  December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value  of  the
Partnership's  interest  in the Waco property  was  approximately
$385,600.   In the fourth quarter of 1997, a charge to operations
for  real estate impairment of $100,000 was recognized, which  is
the  difference between the book value at December  31,  1997  of
$485,600  and the estimated fair value of $385,600.   The  charge
was  recorded  against  the cost of the land  and  building.   In
December, 1998, the Partnership re-analyzed the market conditions
in  the  area  and determined the fair value of the Partnership's
interest  declined  to  approximately $154,300.   In  the  fourth
quarter  of  1998,  a  charge  to  operations  for  real   estate
impairment  of  $221,000 was recognized, which is the  difference
between  book  value  at December 31, 1998 of  $375,300  and  the
estimated  fair  value  of  $154,300.  The  charge  was  recorded
against the cost of the land and building.

        In March, 1999, the Partnership entered into an agreement
to  sell the Waco property to an unrelated third party.   On  May
10, 1999, the sale closed with the Partnership receiving net sale
proceeds of $158,131 which resulted in a net gain of $5,441.   At
the  time  of sale, the cost and related accumulated depreciation
was $353,285 and $200,595, respectively.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

         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
called  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.   As  of
December  31, 1997, based on an analysis of market conditions  in
the  area,  it was determined the fair value of the Partnership's
interest  in the land was approximately $200,000.  In the  fourth
quarter  of  1997,  a  charge  to  operations  for  real   estate
impairment  of  $54,000 was recognized, which is  the  difference
between  the book value at December 31, 1997 of $253,747 and  the
estimated  fair  value  of  $200,000.   In  December,  1998,  the
Partnership  re-analyzed the market conditions in  the  area  and
determined  the fair value of the Partnership's interest  in  the
land  declined to approximately $175,000.  In the fourth  quarter
of  1998,  a  charge to operations for real estate impairment  of
$25,000 was recognized, which is the difference between the  book
value  at  December 31, 1998 of $200,000 and the  estimated  fair
value of $175,000.

        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 sales  proceeds  of
$149,201,  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.

        Pursuant  to  the Partnership Agreement, as amended,  net
sale proceeds may be reinvested in additional properties until  a
date  ten  years after the date on which the offer  and  sale  of
Units  is  terminated.  This period expired on November 6,  1997.
In  February,  1998,  the Managing General  Partner  proposed  an
Amendment  to the Limited Partnership Agreement that would  allow
the  Partnership  to reinvest the majority of the  sale  proceeds
from the J.T. McCord's restaurant in Irving, Texas and subsequent
property  sales in additional properties.  The proposed Amendment
did not receive a majority vote for adoption.

       In December, 1998, Gulf Coast Restaurants, Inc. (GCR), the
lessee of the Applebee's restaurant in Slidell, Louisiana,  filed
for reorganization.  GCR is continuing to make the lease payments
to  the Partnership under the supervision of the bankruptcy court
while  they  develop  a reorganization plan.   If  the  Lease  is
assumed, GCR must comply with all Lease terms and any unpaid rent
must be paid.  If the Lease is rejected, GCR will be required  to
return possession of the property to the Partnership and past due
amounts will be dismissed and the Partnership will be responsible
for  re-leasing  the property.  At December 31,  1999,  GCR  owed
$19,197  for  rent  due  prior to the  date  of  the  filing  for
reorganization.  An analysis of the operating statements of  this
property  indicate  that  it  is generating  profits  and  it  is
management's  belief that the Lease will be assumed  by  GCR  and
that,  ultimately, the property will be purchased by a  different
operator,  approved by the bankruptcy court, at a price exceeding
book value.

        In  February,  1999,  the  Partnership  entered  into  an
agreement  to  sell  the  Fuddruckers restaurant  in  St.  Louis,
Missouri to an unrelated third party.  On June 16, 1999, the sale
closed  with  the  Partnership receiving  net  sale  proceeds  of
$763,611  which resulted in a net gain of $178,334.  At the  time
of  sale,  the  cost  and  related accumulated  depreciation  was
$761,053 and $175,776, respectively.

        In  November,  1999,  the  Partnership  entered  into  an
agreement to sell the Caribou Coffee store in Atlanta, Georgia to
an  unrelated third party.  On February 2, 2000, the sale  closed
with the Partnership receiving net sale proceeds of approximately
$1,479,000,  which  resulted  in  a  net  gain  of  approximately
$284,000.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

Major Tenants

        During  1999,  five  of  the Partnership's  lessees  each
contributed  more  than  ten percent of the  Partnership's  total
rental  revenue.  The major tenants in aggregate contributed  75%
of  the  Partnership's  total rental  revenue  in  1999.   It  is
anticipated  that, based on the minimum rental payments  required
under  the  leases, each major tenant will continue to contribute
more  than ten percent of the Partnership's total rental  revenue
in  2000  and future years.  The only exception is the tenant  in
the  Caribou Coffee store will not continue to be a major  tenant
since  the  property was sold in February, 2000.  Any failure  of
these  major tenants or business concepts could materially affect
the Partnership's net income and cash distributions.

Competition

        The  Partnership is a minor factor in the commercial real
estate  business.   There are numerous entities  engaged  in  the
commercial  real  estate  business which have  greater  financial
resources  than  the  Partnership.  At the time  the  Partnership
elects to dispose of its properties, the Partnership will  be  in
competition  with other persons and entities to find  buyers  for
its properties.

Employees

        The  Partnership  has  no direct  employees.   Management
services   are  performed  for  the  Partnership  by   AEI   Fund
Management, Inc., an affiliate of AFM.

Year 2000 Compliance

       The Year 2000 issue is the result of computer systems that
use  two-digits  rather than four to define the applicable  year,
which  may prevent such systems from accurately processing  dates
ending  in  the  Year  2000 and beyond.   This  could  result  in
computer  system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or  receive  electronic data, or to engage  in  routine  business
activities.

        AEI  Fund  Management, Inc. (AEI) performs all management
services  for  the  Partnership.   In  1998,  AEI  completed   an
assessment  of  its  computer hardware and software  systems  and
replaced or upgraded certain computer hardware and software using
the  assistance  of  outside vendors.  AEI has  received  written
assurance  from  the equipment and software manufacturers  as  to
Year  2000  compliance.   The  costs associated  with  Year  2000
compliance  have not been, and are not expected to be,  material.
The  Partnership is not aware of any issues related to Year  2000
non  compliance  with AEI systems or the systems of  the  various
tenants.


ITEM 2.   DESCRIPTION OF PROPERTIES.

Investment Objectives

        The  Partnership's investment objectives are  to  acquire
existing or newly-developed commercial properties throughout  the
United  States that offer the potential for (i) preservation  and
protection  of  the  Partnership's capital; (ii)  partially  tax-
deferred  cash distributions from operations which  may  increase
through  rent  participation clauses or mandated rent  increases;
and  (iii) long-term capital gains through appreciation in  value
of   the  Partnership's  properties  realized  upon  sale.    The
Partnership  does not have a policy, and there is no  limitation,
as  to the amount or percentage of assets that may be invested in
any  one  property.  However, to the extent possible, the General
Partners  attempt  to  diversify the type  and  location  of  the
Partnership's properties.

ITEM 2.   DESCRIPTION OF PROPERTIES.  (Continued)

Description of Properties

        The  Partnership's properties are all commercial,  single
tenant  buildings.  All the properties were acquired on  a  debt-
free  basis  and are leased to various tenants under  triple  net
leases,   which   are  classified  as  operating   leases.    The
Partnership  holds  an  undivided  fee  simple  interest  in  the
properties.   At  any time prior to selling the  properties,  the
Partnership may mortgage one or more of its properties in amounts
not exceeding 50% of the fair market value of the property.

        The  Partnership's properties are subject to the  general
competitive conditions incident to the ownership of single tenant
investment  real estate.  Since each property is leased  under  a
long-term   lease,   there  is  little  competition   until   the
Partnership  decides to sell the property.   At  this  time,  the
Partnership will be competing with other real estate  owners,  on
both a national and local level, in attempting to find buyers for
the   properties.   In  the  event  of  a  tenant  default,   the
Partnership would be competing with other real estate owners, who
have  property vacancies, to attract a new tenant  to  lease  the
property.   The Partnership's tenants operate in industries  that
are  very  competitive and can be affected  by  factors  such  as
changes  in regional or local economies, seasonality and  changes
in consumer preference.

        The  following table is a summary of the properties  that
the Partnership acquired and owned as of December 31, 1999.


                             Total Property                  Annual   Annual
                     Purchase  Acquisition                   Lease    Rent Per
Property               Date      Costs      Lessee           Payment  Sq. Ft.

Creative Years Early                      Creative Years
Learning Center                           Early Learning
 Houston, TX          4/8/87  $  483,128   Centers, Inc.    $ 43,035   $ 6.25

Grand Rapids Teachers                      Grand Rapids
Credit Union                                 Teachers
 Wyoming, MI          5/1/87  $  626,239   Credit Union     $ 34,506   $ 9.99

Arby's Restaurant                            RTM Mid-
 Grand Rapids, MI     5/1/87  $  652,880   America, Inc.    $ 24,000   $ 6.89

Fuddruckers Restaurant
 Omaha, NE          11/16/87  $1,151,543  Fuddruckers, Inc. $145,081   $20.94

Children's World
Daycare Center                              ARAMARK
 Sterling Heights, MI                      Educational
 (83.6514%)         11/25/87  $  729,486  Resources, Inc.   $111,413   $21.57

Jiffy Lube Auto Care Center
 Dallas, TX                                 Lone Star
 (25%)              12/10/87  $  154,891  Lubrication, Inc. $ 21,822   $32.70

JEMCARE
 Arkansas Lane
Arlington, TX      12/10/87  $  450,475  JEMCARE, Inc.      $ 41,869   $ 8.31

ITEM 2.   PROPERTIES.  (Continued)

                             Total Property                  Annual   Annual
                     Purchase  Acquisition                   Lease    Rent Per
Property               Date      Costs      Lessee           Payment  Sq. Ft.


Sports City Cafe                            Texas
 Mesquite, TX                             Sports City
 (35%)              12/16/87  $  520,109   Cafe, Ltd.       $ 32,445   $13.10

JEMCARE
 Matlock Avenue
 Arlington, TX      12/16/87  $  603,641  JEMCARE, Inc.     $ 48,703   $ 8.28

Cheddar's Restaurant
 Indianapolis, IN
 (50%)               2/16/88  $  253,747      (1)

Applebee's Restaurant
 Slidell, LA                                Gulf Coast
 (73%)                5/5/93  $  746,465  Restaurants, Inc. $119,214   $35.65

                                            Renaissant
Applebee's Restaurant                       Development
 Victoria, TX        3/22/96  $1,335,555       Corp.        $163,199   $29.78

Caribou Coffee Store                      Caribou Coffee
 Atlanta, GA         8/15/97  $1,247,571   Company, Inc.    $145,576   $34.22


(1) The  property was destroyed by fire and the land is listed for
    sale.

        The  properties  listed above with  a  partial  ownership
percentage  are  owned with affiliates of the  Partnership.   AEI
Real  Estate  Fund  85-B Limited Partnership owns  the  remaining
interest in the Children's World Daycare Center.  AEI Real Estate
Fund XVII Limited Partnership owns the remaining interests in the
Jiffy  Lube,  the  Sports City Cafe and the Cheddar's  restaurant
land.   AEI Real Estate Fund XVIII Limited Partnership  owns  the
remaining  interest  in  the Applebee's  restaurant  in  Slidell,
Louisiana.

        Each  Partnership owns a separate, undivided interest  in
the  properties.   No  specific agreement  or  commitment  exists
between the Partnerships as to the management of their respective
interests in the properties, and the Partnership that holds  more
than  a  50% interest does not control decisions over  the  other
Partnership's interest.

        The  initial  Lease  terms are 20 years  except  for  the
JEMCARE  properties (10 years), the Credit Union (11 years),  the
Sports  City  Cafe (12 years), the Creative Years daycare  center
(13  years),  the Arby's (15 years) and the Caribou Coffee  store
(18  years).  Most of the Leases have renewal options  which  may
extend the Lease term an additional 9 to 15 years.

       Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they  occupy.   The General Partners believe the  properties  are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.

ITEM 2.   PROPERTIES.  (Continued)

         For  tax  purposes,  the  Partnership's  properties  are
depreciated  under the Modified Accelerated Cost Recovery  System
(MACRS).  The largest depreciable component of a property is  the
building  which  is depreciated, using the straight-line  method,
over 31.5 or 40 years depending on the date when it was placed in
service.  The remaining depreciable components of a property  are
personal  property and land improvements which  are  depreciated,
using  an  accelerated method, over 5 and 15 years, respectively.
Since the Partnership has tax-exempt Partners, the Partnership is
subject to the rules of Section 168(h)(6) of the Internal Revenue
Code  which  requires a percentage of the properties' depreciable
components to be depreciated over longer lives using the straight-
line method.  In general, the federal tax basis of the properties
for  tax depreciation purposes is the same as the basis for  book
depreciation purposes except for properties whose book value  was
reduced  by  a real estate impairment loss pursuant to  Financial
Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets  to  be
Disposed  of."   The  real  estate  impairment  loss,  which  was
recorded  against  the  book cost of  the  land  and  depreciable
property, was not recognized for tax purposes.

        During the last five years or since the date of purchase,
if  purchased  after December 31, 1994, all properties  were  100
percent  occupied by the lessees noted except for the  properties
discussed  below.  The Sports City Cafe was 100 percent  occupied
by  a  prior lessee until December, 1995.  The property  was  re-
leased  to  the current lessee on March 15, 1997.  The  Cheddar's
property was 100 percent occupied until January, 1996.

ITEM 3.   LEGAL PROCEEDINGS.

       None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

       None.


                             PART II

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
        RELATED SECURITY HOLDER MATTERS.

        As  of  December  31, 1999, there were 1,449  holders  of
record  of the registrant's Limited Partnership Units.  There  is
no  other  class  of  security outstanding  or  authorized.   The
registrant's  Units  are  not a traded security  in  any  market.
However,  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 total 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 1999, twenty-one Limited Partners redeemed a total
of  138  Partnership  Units for $60,581 in  accordance  with  the
Partnership  Agreement.  In prior years, a total of  128  Limited
Partners  redeemed 1,393.85 Partnership Units for $990,473.   The
redemptions  increase the remaining Limited  Partners'  ownership
interest in the Partnership.

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
        RELATED SECURITY HOLDER MATTERS.  (Continued)

       Cash distributions of $14,181 and $15,258 were made to the
General Partners and $1,343,317 and $1,349,386 were made  to  the
Limited   Partners   in   1999  and  1998,   respectively.    The
distributions  were made on a quarterly basis and  represent  Net
Cash   Flow,  as  defined,  except  as  discussed  below.   These
distributions  should  not be compared  with  dividends  paid  on
capital stock by corporations.

        As  part  of the Limited Partner distributions  discussed
above,  the  Partnership  distributed $750,000  and  $734,218  of
proceeds from property sales in 1999 and 1998, respectively.  The
distributions  reduced  the  Limited Partners'  Adjusted  Capital
Contributions.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.

Results of Operations

        For  the  years  ended December 31, 1999  and  1998,  the
Partnership   recognized   rental  income   of   $1,097,180   and
$1,040,302,   respectively.   During  the   same   periods,   the
Partnership  earned  investment income of  $12,060  and  $17,574,
respectively.  In 1999, rental income increased as the result  of
deferred  income  recognized as a  result  of  the  sale  of  the
Fuddruckers  restaurant and rent increases  on  nine  properties.
This  increase was offset by a reduction in regular rental income
due  to  the  sale  of  the  Fuddruckers  restaurant.   In  1998,
investment  income  was  higher  as  sale  proceeds  received  in
December, 1997 were invested in short-term investments until they
were distributed to the Partners in April, 1998.

        The Partnership owned a 55.0958% interest in a restaurant
in  Waco, Texas, which was previously closed.  In June 1995,  the
Partnership re-leased the restaurant to Tex-Mex Cocina  of  Waco,
L.C.   The Lease Agreement had a primary term of eighteen  months
with an annual rental payment of $29,752.  In December, 1997, the
lessee  elected not to exercise the renewal option in the  lease.
The  restaurant was closed and listed for sale or  lease.   While
the  property was vacant, the Partnership was responsible for the
real  estate  taxes  and  other costs required  to  maintain  the
property.

        As  of  December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value  of  the
Partnership's  interest  in the Waco property  was  approximately
$385,600.   In the fourth quarter of 1997, a charge to operations
for  real estate impairment of $100,000 was recognized, which  is
the  difference between the book value at December  31,  1997  of
$485,600  and the estimated fair value of $385,600.   The  charge
was  recorded  against  the cost of the land  and  building.   In
December, 1998, the Partnership re-analyzed the market conditions
in  the  area  and determined the fair value of the Partnership's
interest  declined  to  approximately $154,300.   In  the  fourth
quarter  of  1998,  a  charge  to  operations  for  real   estate
impairment  of  $221,000 was recognized, which is the  difference
between  book  value  at December 31, 1998 of  $375,300  and  the
estimated  fair  value  of  $154,300.  The  charge  was  recorded
against the cost of the land and building.

        In March, 1999, the Partnership entered into an agreement
to  sell the Waco property to an unrelated third party.   On  May
10, 1999, the sale closed with the Partnership receiving net sale
proceeds of $158,131 which resulted in a net gain of $5,441.   At
the  time  of sale, the cost and related accumulated depreciation
was $353,285 and $200,595, respectively.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

         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
called  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.   As  of
December  31, 1997, based on an analysis of market conditions  in
the  area,  it was determined the fair value of the Partnership's
interest  in the land was approximately $200,000.  In the  fourth
quarter  of  1997,  a  charge  to  operations  for  real   estate
impairment  of  $54,000 was recognized, which is  the  difference
between  the book value at December 31, 1997 of $253,747 and  the
estimated  fair  value  of  $200,000.   In  December,  1998,  the
Partnership  re-analyzed the market conditions in  the  area  and
determined  the fair value of the Partnership's interest  in  the
land  declined to approximately $175,000.  In the fourth  quarter
of  1998,  a  charge to operations for real estate impairment  of
$25,000 was recognized, which is the difference between the  book
value  at  December 31, 1998 of $200,000 and the  estimated  fair
value of $175,000.

       In December, 1998, Gulf Coast Restaurants, Inc. (GCR), the
lessee of the Applebee's restaurant in Slidell, Louisiana,  filed
for reorganization.  GCR is continuing to make the lease payments
to  the Partnership under the supervision of the bankruptcy court
while  they  develop  a reorganization plan.   If  the  Lease  is
assumed, GCR must comply with all Lease terms and any unpaid rent
must be paid.  If the Lease is rejected, GCR will be required  to
return possession of the property to the Partnership and past due
amounts will be dismissed and the Partnership will be responsible
for  re-leasing  the property.  At December 31,  1999,  GCR  owed
$19,197  for  rent  due  prior to the  date  of  the  filing  for
reorganization.  An analysis of the operating statements of  this
property  indicate  that  it  is generating  profits  and  it  is
management's  belief that the Lease will be assumed  by  GCR  and
that,  ultimately, the property will be purchased by a  different
operator,  approved by the bankruptcy court, at a price exceeding
book value.

        In  January, 2000, Texas Sports City Cafe, Ltd.  (Texas),
the lessee of the Sports City Cafe, notified the Partnership that
they   were   discontinuing  the  restaurant   operations.    The
Partnership  is negotiating to sell the property for $900,000  to
an  unrelated  third  party,  whom  has  assumed  the  restaurant
operations  from  Texas.  The Partnership's  share  of  the  sale
proceeds  would be $315,000.  In the fourth quarter  of  1999,  a
charge  to  operations of $70,000 was recognized for real  estate
impairment,  which was the difference between the book  value  at
December 31, 1999 of $381,254 and the estimated net proceeds from
the  sale.   The  charge was recorded against  the  cost  of  the
building.   The  land and building have been classified  as  Real
Estate Held for Sale at December 31, 1999.

        During  the years ended December 31, 1999 and  1998,  the
Partnership   paid   Partnership   administration   expenses   to
affiliated parties of $184,644 and $210,718, 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  $28,293 and $49,925, 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 1999, when compared to 1998, is the  result
of expenses incurred in 1998 related to a proxy statement and the
Waco property.

       As of December 31, 1999, the Partnership's annualized cash
distribution   rate  was  5%,  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 and
income  were allocated to Limited Partners and 1% to the  General
Partners.
ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

        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.

       The Year 2000 issue is the result of computer systems that
use  two-digits  rather than four to define the applicable  year,
which  may prevent such systems from accurately processing  dates
ending  in  the  Year  2000 and beyond.   This  could  result  in
computer  system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or  receive  electronic data, or to engage  in  routine  business
activities.

        AEI  Fund  Management, Inc. (AEI) performs all management
services  for  the  Partnership.   In  1998,  AEI  completed   an
assessment  of  its  computer hardware and software  systems  and
replaced or upgraded certain computer hardware and software using
the  assistance  of  outside vendors.  AEI has  received  written
assurance  from  the equipment and software manufacturers  as  to
Year  2000  compliance.   The  costs associated  with  Year  2000
compliance  have not been, and are not expected to be,  material.
The  Partnership is not aware of any issues related to Year  2000
non  compliance  with AEI systems or the systems of  the  various
tenants.

Liquidity and Capital Resources

        During  1999,  the Partnership's cash balances  increased
$277,233  mainly as a result of cash generated from the  sale  of
two  properties.   Net  Cash  provided  by  operating  activities
increased from $766,940 in 1998 to $781,096 in 1999 as  a  result
of an increase in income and a decrease in expenses in 1999 which
were partially offset by net timing differences in the collection
of payments from the lessees and the payment of expenses.

        Net cash provided by investing activities was $921,742 in
1999, which represented cash flow generated from the sale of real
estate.

        In  February,  1999,  the  Partnership  entered  into  an
agreement  to  sell  the  Fuddruckers restaurant  in  St.  Louis,
Missouri to an unrelated third party.  On June 16, 1999, the sale
closed  with  the  Partnership receiving  net  sale  proceeds  of
$763,611  which resulted in a net gain of $178,334.  At the  time
of  sale,  the  cost  and  related accumulated  depreciation  was
$761,053 and $175,776, respectively.

       In June, 1994, the Partnership received a lump sum payment
of $140,184 as compensation for certain modifications made to the
St. Louis Fuddruckers Lease.  The lump sum payment was recognized
as income over the Lease term using the straight line method.  As
a  result of the sale, the Lease Agreement was terminated and the
Partnership  recognized  the balance of the  deferred  income  of
$91,164 in the second quarter of 1999.

        In  November,  1999,  the  Partnership  entered  into  an
agreement to sell the Caribou Coffee store in Atlanta, Georgia to
an  unrelated third party.  On February 2, 2000, the sale  closed
with the Partnership receiving net sale proceeds of approximately
$1,479,000,  which  resulted  in  a  net  gain  of  approximately
$284,000.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

       During 1999 and 1998, the Partnership distributed $757,576
and  $741,635  of  net sale proceeds to the Limited  and  General
Partners as part of their regular quarterly distributions,  which
represented a return of capital of $55.12 and $52.78 per  Limited
Partnership Unit, respectively.

       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.   The  redemption payments generally are funded  with  cash
that  would  normally  be paid as part of the  regular  quarterly
distributions.    As   a   result,   total   distributions    and
distributions payable have fluctuated from year to  year  due  to
cash used to fund redemption payments.

        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 1999, twenty-one Limited Partners redeemed a total
of  138  Partnership  Units for $60,581 in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, a total  of
128  Limited  Partners  redeemed 1,393.85 Partnership  Units  for
$990,473.    The  redemptions  increase  the  remaining   Limited
Partners' ownership interest in the Partnership.

       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.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.  (Continued)

Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995

         The   foregoing  Management's  Discussion  and  Analysis
contains various "forward looking  statements" within the meaning
of   federal   securities   laws  which  represent   management's
expectations  or  beliefs  concerning  future  events,  including
statements  regarding anticipated application of  cash,  expected
returns  from rental income, growth in revenue, taxation  levels,
the  sufficiency  of  cash to meet operating expenses,  rates  of
distribution,  and  other  matters.   These,  and  other  forward
looking statements made by the Partnership, must 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:

<BULLET>  Market and economic conditions which affect  the
          value  of the properties the Partnership owns  and  the
          cash from rental income such properties generate;

<BULLET>  the federal income tax consequences of rental
          income,  deductions, gain on sales and other items  and
          the affects of these consequences for investors;

<BULLET>  resolution  by  the  General   Partners   of
          conflicts with which they may be confronted;

<BULLET>  the  success  of  the  General  Partners   of
          locating   properties   with  favorable   risk   return
          characteristics;

<BULLET>  the effect of tenant defaults; and

<BULLET>  the condition of the industries in which  the
          tenants of properties owned by the Partnership operate.

ITEM 7.   FINANCIAL STATEMENTS.

       See accompanying Index to Financial Statements.



          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  INDEX TO FINANCIAL STATEMENTS






Report of Independent Auditors

Balance Sheet as of December 31, 1999 and 1998

Statements for the Years Ended December 31, 1999 and 1998:

     Income

     Cash Flows

     Changes in Partners' Capital

Notes to Financial Statements




                 REPORT OF INDEPENDENT AUDITORS





To the Partners:
AEI Real Estate Fund XVI Limited Partnership
St. Paul, Minnesota



      We  have audited the accompanying balance sheet of AEI Real
Estate   Fund  XVI  Limited  Partnership  (a  Minnesota   limited
partnership)  as  of December 31, 1999 and 1998 and  the  related
statements of income, cash flows and changes in partners' capital
for  the  years then ended.  These financial statements  are  the
responsibility    of   the   Partnership's    management.     Our
responsibility  is  to  express an  opinion  on  these  financial
statements based on our audits.

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

      In  our opinion, the financial statements referred to above
present  fairly, in all material respects, the financial position
of  AEI  Real Estate Fund XVI Limited Partnership as of  December
31, 1999 and 1998, and the results of its operations and its cash
flows  for  the  years then ended, in conformity  with  generally
accepted accounting principles.



Minneapolis,  Minnesota         Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 25, 2000                Certified Public Accountants

<PAGE>
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                          BALANCE SHEET

                           DECEMBER 31

                             ASSETS

                                                    1999            1998
CURRENT ASSETS:
  Cash and Cash Equivalents                     $   355,246     $    78,013
  Receivables                                        35,184          35,703
                                                 -----------     -----------
      Total Current Assets                          390,430         113,716
                                                 -----------     -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            2,773,203       3,474,363
  Buildings and Equipment                         5,408,671       6,341,958
  Accumulated Depreciation                       (1,989,271)     (2,320,311)
                                                 -----------     -----------
                                                  6,192,603       7,496,010
  Real Estate Held for Sale                         486,001         174,747
                                                 -----------     -----------
      Net Investments in Real Estate              6,678,604       7,670,757
                                                 -----------     -----------
          Total Assets                          $ 7,069,034     $ 7,784,473
                                                 ===========     ===========


                       LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.          $    54,536     $    64,626
  Distributions Payable                             130,858         138,384
  Deferred Income                                    11,892          22,212
                                                 -----------     -----------
      Total Current Liabilities                     197,286         225,222
                                                 -----------     -----------

DEFERRED INCOME - Net of Current Portion             82,241         177,557

PARTNERS' CAPITAL (DEFICIT):
  General Partners                                  (61,303)        (55,381)
  Limited Partners, $1,000 Unit value;
   15,000 Units authorized and issued;
   13,468 and 13,606 outstanding in 1999
   and 1998, respectively                         6,850,810       7,437,075
                                                 -----------     -----------
      Total Partners' Capital                     6,789,507       7,381,694
                                                 -----------     -----------
        Total Liabilities and Partners' Capital $ 7,069,034     $ 7,784,473
                                                 ===========     ===========


 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 YEARS ENDED DECEMBER 3l


                                                 1999           1998

INCOME:
  Rent                                      $ 1,097,180      $ 1,040,302
  Investment Income                              12,060           17,574
                                             -----------      -----------
      Total Income                            1,109,240        1,057,876
                                             -----------      -----------

EXPENSES:
  Partnership Administration - Affiliates       184,644          210,718
  Partnership Administration and Property
     Management - Unrelated Parties              28,293           49,925
  Depreciation                                  184,186          199,625
  Real Estate Impairment                         70,000          246,000
                                             -----------      -----------
      Total Expenses                            467,123          706,268
                                             -----------      -----------

OPERATING INCOME                                642,117          351,608

GAIN ON SALE OF REAL ESTATE                     183,775                0
                                             -----------      -----------
NET INCOME                                  $   825,892      $   351,608
                                             ===========      ===========

NET INCOME ALLOCATED:
  General Partners                          $     8,259      $     3,516
  Limited Partners                              817,633          348,092
                                             -----------      -----------
                                            $   825,892      $   351,608
                                             ===========      ===========

NET INCOME PER LIMITED PARTNERSHIP UNIT
(13,571 and 13,840 weighted average Units outstanding
in 1999 and 1998, respectively)             $     60.25      $     25.15
                                             ===========      ===========

 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 YEARS ENDED DECEMBER 31


                                                     1999           1998

CASH FLOWS FROM OPERATING ACTIVITIES:
 Net Income                                      $   825,892    $   351,608

 Adjustments To Reconcile Net Income
 To Net Cash Provided By Operating Activities:
     Depreciation                                    184,186        199,625
     Real Estate Impairment                           70,000        246,000
     Gain on Sale of Real Estate                    (183,775)             0
     (Increase) Decrease in Receivables                  519        (12,397)
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                    (10,090)         4,316
     Decrease in Deferred Income                    (105,636)       (22,212)
                                                  -----------    -----------
       Total Adjustments                             (44,796)       415,332
                                                  -----------    -----------
       Net Cash Provided By
          Operating Activities                       781,096        766,940
                                                  -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from Sale of Real Estate                  921,742              0
                                                  -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (Decrease) in Distributions Payable        (7,526)         1,087
  Distributions to Partners                       (1,356,886)    (1,363,016)
  Redemption Payments                                (61,193)      (162,700)
                                                  -----------    -----------
       Net Cash Used For
          Financing Activities                    (1,425,605)    (1,524,629)
                                                  -----------    -----------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                              277,233       (757,689)

CASH AND CASH EQUIVALENTS, beginning of period        78,013        835,702
                                                  -----------    -----------
CASH AND CASH EQUIVALENTS, end of period         $   355,246    $    78,013
                                                  ===========    ===========

 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 YEARS ENDED DECEMBER 31


                                                        Limited
                                                      Partnership
                              General    Limited              Units
                              Partners   Partners      Total  Outstanding


BALANCE, December 31, 1997   $(43,639)  $ 8,599,441   $ 8,555,802   13,919.40

  Distributions               (13,630)   (1,349,386)   (1,363,016)

  Redemption Payments          (1,628)     (161,072)     (162,700)    (313.25)

  Net Income                    3,516       348,092       351,608
                              ---------  -----------   -----------  ---------
BALANCE, December 31, 1998    (55,381)    7,437,075     7,381,694   13,606.15

  Distributions               (13,569)   (1,343,317)   (1,356,886)

  Redemption Payments            (612)      (60,581)      (61,193)    (138.00)

  Net Income                    8,259       817,633       825,892
                              ---------  -----------   -----------  ---------
BALANCE, December 31, 1999   $(61,303)  $ 6,850,810   $ 6,789,507   13,468.15
                              =========  ===========   ===========  =========


 The accompanying Notes to Financial Statements are an integral
                     part of this statement.
</PAGE>
<PAGE>
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(1)  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.    Robert  P.  Johnson,  the  President  and   sole
     shareholder of AFM, serves as the Individual General Partner
     and  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  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  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.

     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 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.

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(1)  Organization - (Continued)

     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing  or  other  disposition  of  property,  will  be
     allocated  first  in the same ratio in  which,  and  to  the
     extent,  Net  Cash Flow is distributed to the  Partners  for
     such year.  Any additional profits will be allocated 90%  to
     the Limited Partners and 10% to the General Partners. In the
     event  no  Net  Cash  Flow  is distributed  to  the  Limited
     Partners,  90%  of each item of income, gain or  credit  for
     each  respective  year  shall be allocated  to  the  Limited
     Partners,  and 10% of each such item shall be  allocated  to
     the  General Partners.  Net losses from operations  will  be
     allocated 98% to the Limited Partners and 2% to the  General
     Partners.

     For  tax purposes, profits arising from the sale, financing,
     or  other  disposition  of property  will  be  allocated  in
     accordance  with the Partnership Agreement as  follows:  (i)
     first,  to  those  partners with deficit balances  in  their
     capital  accounts  in an amount equal to  the  sum  of  such
     deficit  balances; (ii) second, 99% to the Limited  Partners
     and  1%  to the General Partners until the aggregate balance
     in  the Limited Partners' capital accounts equals the sum of
     the Limited Partners' Adjusted Capital Contributions plus an
     amount  equal to 14% of their Adjusted Capital Contributions
     per  annum, cumulative but not compounded, to the extent not
     previously  allocated; (iii) third, to the General  Partners
     until  cumulative allocations to the General Partners  equal
     15%  of cumulative allocations.  Any remaining balance  will
     be  allocated  85% to the Limited Partners and  15%  to  the
     General  Partners.   Losses will be  allocated  98%  to  the
     Limited Partners and 2% to the General Partners.

     The  General Partners are not required to currently  fund  a
     deficit   capital   balance.   Upon   liquidation   of   the
     Partnership or withdrawal by a General Partner, the  General
     Partners will contribute to the Partnership an amount  equal
     to  the  lesser  of  the deficit balances in  their  capital
     accounts  or  1%  of  total Limited  Partners'  and  General
     Partners' capital contributions.

(2)  Summary of Significant Accounting Policies -

     Financial Statement Presentation

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

     Accounting Estimates

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


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

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

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

     Cash Concentrations of Credit Risk

       At  times  throughout  the year,  the  Partnership's  cash
       deposited  in  financial  institutions  may  exceed   FDIC
       insurance limits.

     Statement of Cash Flows

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

     Income Taxes

       The  income or loss of the Partnership for federal  income
       tax  reporting  purposes is includable in the  income  tax
       returns of the partners.  Accordingly, no recognition  has
       been  given to income taxes in the accompanying  financial
       statements.

       The  tax  return, the qualification of the Partnership  as
       such  for  tax  purposes, and the amount of  distributable
       Partnership  income or loss are subject to examination  by
       federal   and  state  taxing  authorities.   If  such   an
       examination  results  in  changes  with  respect  to   the
       Partnership  qualification or in changes to  distributable
       Partnership  income  or loss, the taxable  income  of  the
       partners would be adjusted accordingly.

     Real Estate

       The  Partnership's real estate is leased under triple  net
       leases  classified as operating leases.   The  Partnership
       recognizes  rental revenue on the accrual basis  according
       to  the terms of the individual leases.  For leases  which
       contain  cost  of  living  increases,  the  increases  are
       recognized in the year in which they are effective.

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


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

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

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

       The   buildings  and  equipment  of  the  Partnership  are
       depreciated  using the straight-line method for  financial
       reporting purposes based on estimated useful lives  of  30
       years and 10 years, respectively.

(3)  Related Party Transactions -

     The  Partnership owns an 83.6514% interest in the Children's
     World  Daycare Center.  The remaining interest is  owned  by
     AEI  Real Estate Fund 85-B Limited Partnership, an affiliate
     of  the Partnership.  The Partnership owns a 35% interest in
     a Sports City Cafe, a 25% interest in a Jiffy Lube and a 50%
     interest in a parcel of land in Indianapolis, Indiana.   The
     remaining  interests in these properties are  owned  by  AEI
     Real  Estate Fund XVII Limited Partnership, an affiliate  of
     the Partnership.  The Partnership owns a 73% interest in  an
     Applebee's restaurant in Slidell, Louisiana.  The  remaining
     interest  in this property is owned by AEI Real Estate  Fund
     XVIII  Limited Partnership, an affiliate of the Partnership.
     The Partnership owned a 55.0958% interest in a restaurant in
     Waco,  Texas and a 40% interest in the St. Louis Fuddruckers
     restaurant.   The  remaining interests in  these  properties
     were  owned  by AEI Real Estate Fund XV Limited Partnership,
     an affiliate of the Partnership.

     Each  Partnership owns a separate undivided interest in  the
     properties.   No  specific agreement  or  commitment  exists
     between  the  Partnerships as to  the  management  of  their
     respective  interests in the properties, and the Partnership
     that  holds  more  than  a  50% interest  does  not  control
     decisions  over  the  other  Partnership's  interest.    The
     financial   statements  reflect  only   this   Partnership's
     percentage  share  of  the properties'  land,  building  and
     equipment, liabilities, revenues and expenses.

     AEI   and  AFM  received  the  following  compensation   and
     reimbursements for costs and expenses from the Partnership:

                                    Total Incurred by the Partnership
                                     for the Years Ended December 3l

                                                    1999          1998
a.AEI and AFM are reimbursed for all costs
  incurred in connection with managing the
  Partnership's operations, maintaining the
  Partnership's books and communicating
  the results of operations to the Limited
  Partners.                                      $ 184,644      $ 210,718
                                                  =========      =========


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(3)  Related Party Transactions - (Continued)

                                    Total Incurred by the Partnership
                                     for the Years Ended December 3l

                                                 1999           1998
b.AEI and AFM are reimbursed for all direct
  expenses they have paid on the Partnership's
  behalf to third parties.  These expenses
  included printing costs, legal and filing fees,
  direct administrative costs, outside audit and
  accounting costs, taxes, insurance and
  other property costs.                        $  28,293      $  49,925
                                                =========      =========

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

(4)  Investments in Real Estate -

     The  Partnership  leases its properties to  various  tenants
     through triple net leases, which are classified as operating
     leases.  Under a triple net lease, the lessee is responsible
     for  all  real estate taxes, insurance, maintenance, repairs
     and  operating expenses of the property.  The initial  Lease
     terms  are  20  years except for the JEMCARE properties  (10
     years),  the Credit Union (11 years), the Sports  City  Cafe
     (12  years),  the Creative Years daycare center (13  years),
     the  Arby's  (15  years) and the Caribou  Coffee  store  (18
     years).   Most of the Leases have renewal options which  may
     extend  the  Lease term an additional 9 to  15  years.   The
     Leases contain rent clauses which entitle the Partnership to
     receive additional rent in future years based on stated rent
     increases  or  if  gross receipts for  the  property  exceed
     certain  specified amounts, among other conditions.  Certain
     lessees  have been granted options to purchase the property.
     Depending  on  the  lease,  the  purchase  price  is  either
     determined  by  a  formula, or is the greater  of  the  fair
     market value of the property or the amount determined  by  a
     formula.   In all cases, if the option were to be  exercised
     by  the lessee, the purchase price would be greater than the
     original cost of the property.

     The  Partnership's  properties are all  commercial,  single-
     tenant  buildings.  The Sports City Cafe  and  the  Creative
     Years  daycare center were constructed in 1984.   The  Omaha
     Fuddruckers restaurant was constructed in 1985 and remodeled
     in  1987.   The Applebee's restaurant in Slidell, Louisiana,
     was  constructed  in  1991.   The Applebee's  restaurant  in
     Victoria, Texas was constructed in 1996.  The Caribou Coffee
     store  was  constructed in 1997.  All other properties  were
     constructed  in  1986, 1987 or 1988.   All  properties  were
     acquired  in 1987 or 1988, except for the Slidell Applebee's
     restaurant   which  was  acquired  in  1993,  the   Victoria
     Applebee's restaurant in 1996, and the Caribou Coffee  store
     in   1997.    There  have  been  no  costs  capitalized   as
     improvements subsequent to the acquisitions.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(4)  Investments in Real Estate - (Continued)

     The cost of the properties not held for sale and the related
     accumulated  depreciation  at  December  31,  1999  are   as
     follows:
                                      Buildings and             Accumulated
Property                      Land      Equipment      Total    Depreciation

Creative Years,
 Houston, TX              $  147,753   $  335,375   $  483,128   $  165,388
Credit Union, Wyoming, MI    166,434      459,805      626,239      228,677
Arby's, Grand Rapids, MI     195,229      457,651      652,880      227,605
Fuddruckers, Omaha, NE       307,913      843,630    1,151,543      496,377
Children's World,
 Sterling Heights, MI        138,133      591,353      729,486      259,631
Jiffy Lube, Dallas, TX        65,918       88,973      154,891       42,771
JEMCARE, Arlington, TX       148,214      302,261      450,475      140,865
JEMCARE, Arlington, TX       323,671      279,970      603,641      128,618
Applebee's, Slidell, LA      278,879      467,586      746,465      103,908
Applebee's, Victoria, TX     379,644      955,911    1,335,555      144,407
Caribou Coffee, Atlanta, GA  621,415      626,156    1,247,571       51,024
                           ----------   ----------   ----------   ----------
                          $2,773,203   $5,408,671   $8,181,874   $1,989,271
                           ==========   ==========   ==========   ==========

     The Partnership owned a 55.0958% interest in a restaurant in
     Waco, Texas, which was previously closed.  In June 1995, the
     Partnership  re-leased the restaurant to Tex-Mex  Cocina  of
     Waco,  L.C.   The  Lease Agreement had  a  primary  term  of
     eighteen  months with an annual rental payment  of  $29,752.
     In  December,  1997, the lessee elected not to exercise  the
     renewal option in the lease.  The restaurant was closed  and
     listed  for  sale or lease.  While the property was  vacant,
     the  Partnership was responsible for the real  estate  taxes
     and other costs required to maintain the property.

     As  of  December  31, 1997, based on an analysis  of  market
     conditions in the area, it was determined the fair value  of
     the   Partnership's  interest  in  the  Waco  property   was
     approximately $385,600.  In the fourth quarter  of  1997,  a
     charge  to operations for real estate impairment of $100,000
     was  recognized,  which is the difference between  the  book
     value  at  December 31, 1997 of $485,600 and  the  estimated
     fair value of $385,600.  The charge was recorded against the
     cost  of  the  land  and building.  In December,  1998,  the
     Partnership  re-analyzed the market conditions in  the  area
     and  determined the fair value of the Partnership's interest
     declined  to approximately $154,300.  In the fourth  quarter
     of  1998,  a charge to operations for real estate impairment
     of  $221,000 was recognized, which is the difference between
     book  value  at  December  31,  1998  of  $375,300  and  the
     estimated  fair value of $154,300.  The charge was  recorded
     against the cost of the land and building.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(4)  Investments in Real Estate - (Continued)

     In March, 1999, the Partnership entered into an agreement to
     sell the Waco property to an unrelated third party.  On  May
     10, 1999, the sale closed with the Partnership receiving net
     sale  proceeds of $158,131 which resulted in a net  gain  of
     $5,441.    At  the  time  of  sale,  the  cost  and  related
     accumulated   depreciation  was   $353,285   and   $200,595,
     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 called
     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.  As
     of  December  31,  1997,  based on  an  analysis  of  market
     conditions in the area, it was determined the fair value  of
     the  Partnership's  interest in the land  was  approximately
     $200,000.   In  the  fourth quarter of  1997,  a  charge  to
     operations  for  real  estate  impairment  of  $54,000   was
     recognized, which is the difference between the  book  value
     at  December  31,  1997 of $253,747 and the  estimated  fair
     value  of $200,000.  In December, 1998, the Partnership  re-
     analyzed  the  market conditions in the area and  determined
     the  fair  value of the Partnership's interest in  the  land
     declined  to approximately $175,000.  In the fourth  quarter
     of  1998,  a charge to operations for real estate impairment
     of  $25,000 was recognized, which is the difference  between
     the  book  value  at December 31, 1998 of $200,000  and  the
     estimated fair value of $175,000.

     In  December, 1998, Gulf Coast Restaurants, Inc. (GCR),  the
     lessee  of  the Applebee's restaurant in Slidell, Louisiana,
     filed  for  reorganization.  GCR is continuing to  make  the
     lease  payments to the Partnership under the supervision  of
     the  bankruptcy  court while they develop  a  reorganization
     plan.   If  the Lease is assumed, GCR must comply  with  all
     Lease  terms and any unpaid rent must be paid.  If the Lease
     is  rejected,  GCR will be required to return possession  of
     the property to the Partnership and past due amounts will be
     dismissed  and the Partnership will be responsible  for  re-
     leasing  the  property.   At December  31,  1999,  GCR  owed
     $19,197  for  rent due prior to the date of the  filing  for
     reorganization.  An analysis of the operating statements  of
     this property indicate that it is generating profits and  it
     is management's belief that the Lease will be assumed by GCR
     and  that, ultimately, the property will be purchased  by  a
     different operator, approved by the bankruptcy court,  at  a
     price exceeding book value.

     In  January, 2000, Texas Sports City Cafe, Ltd. (Texas), the
     lessee  of  the  Sports City Cafe, notified the  Partnership
     that they were discontinuing the restaurant operations.  The
     Partnership is negotiating to sell the property for $900,000
     to an unrelated third party, whom has assumed the restaurant
     operations from Texas.  The Partnership's share of the  sale
     proceeds would be $315,000.  In the fourth quarter of  1999,
     a  charge  to operations of $70,000 was recognized for  real
     estate impairment, which was the difference between the book
     value at December 31, 1999 of $381,254 and the estimated net
     proceeds from the sale.  The charge was recorded against the
     cost  of  the  building.  The land and  building  have  been
     classified  as  Real Estate Held for Sale  at  December  31,
     1999.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(4)  Investments in Real Estate - (Continued)

     In February, 1999, the Partnership entered into an agreement
     to sell the Fuddruckers restaurant in St. Louis, Missouri to
     an unrelated third party.  On June 16, 1999, the sale closed
     with the Partnership receiving net sale proceeds of $763,611
     which  resulted in a net gain of $178,334.  At the  time  of
     sale,  the  cost  and related accumulated  depreciation  was
     $761,053 and $175,776, respectively.

     In November, 1999, the Partnership entered into an agreement
     to  sell the Caribou Coffee store in Atlanta, Georgia to  an
     unrelated third party.  On February 2, 2000, the sale closed
     with   the  Partnership  receiving  net  sale  proceeds   of
     approximately $1,479,000, which resulted in a  net  gain  of
     approximately $284,000.

     During  1999 and 1998, the Partnership distributed  $757,576
     and $741,635 of net sale proceeds to the Limited and General
     Partners  as  part of their regular quarterly distributions,
     which  represented a return of capital of $55.12 and  $52.78
     per Limited Partnership Unit, respectively.

     The   minimum  future  rentals  on  the  Leases  for   years
     subsequent to December 31, 1999 are as follows:

                       2000         $   949,743
                       2001             862,588
                       2002             880,347
                       2003             857,275
                       2004             816,520
                       Thereafter     6,369,590
                                     -----------
                                    $10,736,063
                                     ===========

     In  1999  and  1998,  the Partnership recognized  contingent
     rents of $17,153 and $16,340, respectively.

(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 lump sum payments  from  the  original
     lessee  of $140,184 for the St. Louis property and  $159,539
     for  the  Omaha  property.  The lump sum  payments  will  be
     recognized  as income over the remainder of the Lease  terms
     which  expire  January  31,  2008  and  November  30,  2007,
     respectively, using the straight line method.

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(5)  Deferred Income - (Continued)

     As  of March 31, 1999 and December 31, 1998, the Partnership
     had  recognized $49,020 and $46,440 of the payment  for  the
     St.  Louis  property  as  income.  On  June  16,  1999,  the
     Partnership  sold  the  St. Louis  property  and  the  Lease
     Agreement  was  terminated.  As a  result,  the  Partnership
     recognized  the  balance of the deferred income  related  to
     that property of $91,164 in the second quarter of 1999.

     As  of  December  31,  1999 and 1998,  the  Partnership  had
     recognized $65,406 and $53,514 of the payment for the  Omaha
     property as income.

(6)  Major Tenants -

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

                                                       1999         1998
      Tenants                        Industry

     Fuddruckers, Inc.              Restaurant      $ 292,959    $ 259,457
     Renaissant Development Corp.   Restaurant        160,177      151,110
     Caribou Coffee Company, Inc.   Restaurant        143,209      142,025
     Gulf Coast Restaurants, Inc.   Restaurant        117,534      113,560
     ARAMARK Educational
         Resources, Inc.            Child Care        108,968      107,205
                                                     ---------    ---------

     Aggregate rent revenue of major tenants        $ 822,847    $ 773,357
                                                     =========    =========

     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue                    75%          74%
                                                     =========    =========

(7) Partners' Capital -

     Cash  distributions of $14,181 and $15,258 were made to  the
     General Partners and $1,343,317 and $1,349,386 were made  to
     the  Limited Partners for the years ended December 31,  1999
     and 1998, respectively.  The Limited Partners' distributions
     represent  $98.98  and $97.50 per Limited  Partnership  Unit
     outstanding  using 13,571 and 13,840 weighted average  Units
     in 1999 and 1998, respectively.  The distributions represent
     $55.75  and  $13.31 per Unit of Net Income  and  $43.23  and
     $84.19 per Unit of return of contributed capital in 1999 and
     1998, respectively.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(7) Partners' Capital - (Continued)

     As  part  of  the  Limited  Partner distributions  discussed
     above, the Partnership distributed $750,000 and $734,218  of
     proceeds from property sales in 1999 and 1998, respectively.
     The  distributions  reduced the Limited  Partners'  Adjusted
     Capital Contributions.

     Distributions  of  Net  Cash Flow to  the  General  Partners
     during  1999  and  1998  were subordinated  to  the  Limited
     Partners  as  required in the Partnership Agreement.   As  a
     result,  99%  of distributions and income were allocated  to
     the Limited Partners and 1% to the General Partners.

     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 1999, twenty-one Limited Partners redeemed a total of
     138  Partnership  Units for $60,581 in accordance  with  the
     Partnership Agreement.  The Partnership acquired these Units
     using  Net Cash Flow from operations.  In 1998, twenty-seven
     Limited  Partners  redeemed a total  of  313.25  Partnership
     Units  for $161,072.  The redemptions increase the remaining
     Limited Partners' ownership interest in the Partnership.

     After  the  effect of redemptions and the return of  capital
     from   the   sale   of   property,  the   Adjusted   Capital
     Contribution,  as defined in the Partnership  Agreement,  is
     $846.09 per original $1,000 invested.

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(8)  Income Taxes -

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

                                                    1999          1998
     Net Income for Financial
      Reporting Purposes                        $  825,892    $  351,608

     Depreciation for Tax Purposes
      Under Depreciation for Financial
      Reporting Purposes                             9,201         2,082

     Income Accrued for Tax Purposes
      Under Income for Financial
      Reporting Purposes                          (111,321)      (27,512)

     Property Expenses for Tax Purposes
      (Over) Under Expenses for Financial
      Reporting Purposes                              (864)        1,995

     Real Estate Impairment Loss
      Not Recognized for Tax Purposes               70,000       246,000

     Gain on Sale of Real Estate for Tax
      Purposes Under Gain for Financial
      Reporting Purposes                          (414,382)            0
                                                 ----------    ----------
           Taxable Income to Partners           $  378,526    $  574,173
                                                 ==========    ==========


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1999 AND 1998

(8)  Income Taxes - (Continued)

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

                                                  1999          1998

     Partners' Capital for
      Financial Reporting Purposes             $6,789,507    $ 7,381,694

     Adjusted Tax Basis of Investments
      in Real Estate Over Net Investments
      in Real Estate for Financial
      Reporting Purposes                          452,286        787,467

     Income Accrued for Tax Purposes Over
      Income for Financial
      Reporting Purposes                          155,408        266,729

     Property Expenses for Tax Purposes
      Under Expenses for Financial
      Reporting Purposes                            7,771          8,634

     Syndication Costs Treated as
      Reduction of Capital for
      Financial Reporting Purposes              1,981,686      1,981,686
                                                ----------    -----------
           Partners' Capital for
              Tax Reporting Purposes           $9,386,658    $10,426,210
                                                ==========    ===========
(9)  Fair Value of Financial Instruments -

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

                                        1999                  1998
                                Carrying      Fair    Carrying      Fair
                                 Amount      Value     Amount       Value

     Cash                     $     471   $     471   $    348   $    348
     Money Market Funds         354,775     354,775     77,665     77,665
                               ---------   ---------   ---------  --------
          Total Cash and
            Cash Equivalents  $ 355,246   $ 355,246   $ 78,013   $ 78,013
                               =========   =========   =========  ========

ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
       ACCOUNTING AND FINANCIAL DISCLOSURE.

        None.


                            PART III

ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
       PERSONS;  COMPLIANCE WITH SECTION 16(a)  OF  THE  EXCHANGE
       ACT.

        The  registrant  is  a  limited partnership  and  has  no
officers,  directors, or direct employees.  The General  Partners
of  the  registrant are Robert P. Johnson and AFM.   The  General
Partners  manage and control the Partnership's affairs  and  have
general  responsibility and the ultimate authority in all matters
affecting the Partnership's business.  The director and  officers
of AFM are as follows:

        Robert  P.  Johnson, age 55, is Chief Executive  Officer,
President  and  Director and has held these positions  since  the
formation  of  AFM in September, 1986, and has  been  elected  to
continue in these positions until December, 2000.  From  1970  to
the  present, he has been employed exclusively in the  investment
industry,  specializing  in  tax-advantaged  limited  partnership
investments.   In  that  capacity, he has been  involved  in  the
development,  analysis, marketing and management  of  public  and
private investment programs investing in net lease properties  as
well  as  public  and  private investment programs  investing  in
energy  development.   Since  1971,  Mr.  Johnson  has  been  the
president,  a  director  and  a  registered  principal   of   AEI
Securities, Inc. (formerly AEI Incorporated), which is registered
with  the  Securities  and Exchange Commission  as  a  securities
broker-dealer,  is  a  member  of  the  National  Association  of
Securities  Dealers, Inc. (NASD) and is a member of the  Security
Investors  Protection Corporation (SIPC).  Mr. Johnson  has  been
president, a director and the principal shareholder of  AEI  Fund
Management,  Inc.,  a real estate management company  founded  by
him,  since 1978.  Mr. Johnson is currently a general partner  or
principal  of  the  general  partner  in  fifteen  other  limited
partnerships.

        Mark  E.  Larson,  age 47, is Executive  Vice  President,
Treasurer  and  Chief Financial Officer and has been  elected  to
continue in these positions until December, 2000.  Mr. Larson has
been  Treasurer and Executive Vice President since December, 1987
and  Chief  Financial Officer since January, 1990.   In  January,
1993,  Mr.  Larson was elected to serve as Secretary of  AFM  and
will continue to serve until December, 2000.  Mr. Larson has been
employed  by  AEI  Fund Management, Inc. and affiliated  entities
since  1985.   From  1979  to 1985, Mr. Larson  was  with  Apache
Corporation as manager of Program Accounting responsible for  the
accounting  and reports for approximately 45 public partnerships.
Mr.   Larson   is  responsible  for  supervising  the  accounting
functions of AFM and the registrant.

ITEM 10.     EXECUTIVE COMPENSATION.

        The General Partner and affiliates are reimbursed at cost
for  all  services performed on behalf of the registrant and  for
all  third party expenses paid on behalf of the registrant.   The
cost for services performed on behalf of the registrant is actual
time  spent  performing such services plus  an  overhead  burden.
These  services include organizing the registrant  and  arranging
for  the  offer  and  sale  of Units,  reviewing  properties  for
acquisition and rendering administrative and management services.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.

        The following table sets forth information pertaining  to
the   ownership  of  the  Units  by  each  person  known  by  the
Partnership to beneficially own 5% or more of the Units, by  each
General  Partner, and by each officer or director of the Managing
General Partner as of February 29, 2000:

        Name and Address                       Number of     Percent
      of Beneficial Owner                      Units Held    of Class

   AEI Fund Management XVI, Inc.                    0            0%
   1300 Minnesota World Trade Center
   30 East 7th Street, St. Paul, Minnesota 55101

   Robert P. Johnson                                0            0%
   1300 Minnesota World Trade Center
   30 East 7th Street, St. Paul, Minnesota 55101

   Mark E. Larson                                   0            0%
   1300 Minnesota World Trade Center
   30 East 7th Street, St. Paul, Minnesota 55101

   * Less than 1%

The  persons  set forth in the preceding table hold  sole  voting
power  and power of disposition with respect to all of the  Units
set forth opposite their names.  The General Partners know of  no
holders of more than 5% of the outstanding Units.

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The  registrant,  AFM  and  its  affiliates  have  common
management and utilize the same facilities.  As a result, certain
administrative  expenses  are  allocated  among   these   related
entities.   All  of  such activities and any  other  transactions
involving the affiliates of the General Partner of the registrant
are  governed  by,  and  are conducted in  conformity  with,  the
limitations set forth in the Limited Partnership Agreement of the
registrant.

        The following table sets forth the forms of compensation,
distributions  and cost reimbursements paid by the registrant  to
the  General Partners or their Affiliates in connection with  the
operation  of  the Fund and its properties for  the  period  from
inception through December 31, 1999.

Person or Entity                                      Amount Incurred From
 Receiving                   Form and Method      Inception (February 6, 1987)
Compensation                 of Compensation          To December 31, 1999

AEI Securities, Inc.  Selling Commissions equal to 9%       $1,500,000
                      of proceeds plus a 1% nonaccountable
                      expense allowance, most of which was
                      reallowed to Participating Dealers.

General Partners and  Reimbursement at Cost for other       $  487,080
Affiliates            Organization and Offering Costs.

ITEM 12. CERTAIN RELATIONSHIPS  AND  RELATED  TRANSACTIONS. (Continued)

Person or Entity                                      Amount Incurred From
 Receiving                   Form and Method      Inception (February 6, 1987)
Compensation                 of Compensation          To December 31, 1999


General Partners and  Reimbursement at Cost for all         $  215,052
Affiliates            Acquisition Expenses

General Partners      1% of Net Cash Flow in any fiscal     $  111,086
                      year until the Limited Partners have
                      received annual, non-cumulative
                      distributions of Net Cash Flow  equal
                      to 10% of their Adjusted Capital
                      Contributions and 10% of any remaining
                      Net Cash Flow in such fiscal year.

General Partners and  Reimbursement at Cost for all         $2,666,316
Affiliates            Administrative Expenses attributable
                      to the Fund, including all expenses
                      related to management and disposition
                      of  the Fund's properties and all
                      other transfer agency, reporting, partner
                      relations and other administrative
                      functions.

General Partners      15% of distribution of Net Proceeds   $   36,412
                      of Sale other than distributions
                      necessary to restore Adjusted Capital
                      Contributions and provide a 6% cumulative
                      return to Limited Partners.  The General
                      Partners will receive only 1% of
                      distributions of Net Proceeds
                      of Sale until the Limited Partners have
                      received an amount equal to: (a) their
                      Adjusted Capital Contributions, plus (b)
                      an amount equal to 14% of their Adjusted
                      Capital Contributions per annum,
                      cumulative but not compounded, less (c) all
                      previous cash distributions to the Limited
                      Partners.

        The  limitations  included in the  Partnership  Agreement
require   that  the  cumulative  reimbursements  to  the  General
Partners  and  their affiliates for administrative  expenses  not
allowed under the NASAA Guidelines ("Guidelines") will not exceed
the  sum of (i) the front-end fees allowed by the Guidelines less
the  front-end fees paid, (ii) the cumulative property management
fees  allowed  but  not  paid, (iii) any real  estate  commission
allowed under the Guidelines, and (iv) 10% of Net Cash Flow  less
the  Net Cash Flow actually distributed.  The reimbursements  not
allowed  under  the  Guidelines include  a  controlling  person's
salary  and  fringe  benefits,  rent  and  depreciation.   As  of
December  31, 1999, the cumulative reimbursements to the  General
Partners and their affiliates did not exceed these amounts.

                             PART IV

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.

            A. Exhibits -
                                    Description

               10.1  Net  Lease Agreement  dated
                     March 22, 1996, between the Partnership  and
                     Renaissant Development Corporation  relating
                     to  the  property at 6409 N.  Navarro  Road,
                     Victoria,  Texas (incorporated by  reference
                     to  Exhibit 10.3 of Form 8-K filed with  the
                     Commission on April 4, 1996).

               10.2  Net  Lease Agreement  dated
                     March 15, 1997 between the Partnership,  AEI
                     Real  Estate  Fund XVI Limited  Partnership,
                     and  Texas  Sports City Cafe, Ltd.  relating
                     to  the  property  at  3808  Towne  Crossing
                     Boulevard, Mesquite, Texas (incorporated  by
                     reference  to  Exhibit 10.7 of  Form  10-KSB
                     filed  with  the  Commission  on  March  24,
                     1997).

               10.3  Guarantee  of  Lease  dated
                     March 15, 1997 between the Partnership,  AEI
                     Real  Estate  Fund XVI Limited  Partnership,
                     and  Texas  Sports City Cafe, Ltd.  relating
                     to  the  property  at  3808  Towne  Crossing
                     Boulevard, Mesquite, Texas (incorporated  by
                     reference  to  Exhibit 10.8 of  Form  10-KSB
                     filed  with  the  Commission  on  March  24,
                     1997).

               10.4  Purchase  Agreement  dated
                     March 24, 1999 between the Partnership,  AEI
                     Real Estate Fund XV Limited Partnership  and
                     Tom  Salome relating to the property at 1812
                     North   Valley  Mills  Drive,  Waco,   Texas
                     (incorporated by reference to  Exhibit  10.1
                     of  Form 10-QSB filed with the Commission on
                     July 30, 1999).

               10.5  Purchase  Agreement  dated
                     February  4,  1999 between the  Partnership,
                     AEI  Real Estate Fund XV Limited Partnership
                     and   Elizabeth  Cockrum  relating  to   the
                     property  at 2175 Barrett Station Road,  St.
                     Louis,  Missouri (incorporated by  reference
                     to  Exhibit 10.1 of Form 8-K filed with  the
                     Commission on June 21, 1999).

               10.6  Amendment   to   Purchase
                     Agreement  dated  May 19, 1999  between  the
                     Partnership,   AEI  Real  Estate   Fund   XV
                     Limited  Partnership and  Elizabeth  Cockrum
                     relating  to  the property at  2175  Barrett
                     Station    Road,    St.   Louis,    Missouri
                     (incorporated by reference to  Exhibit  10.2
                     of  Form  8-K  filed with the Commission  on
                     June 21, 1999).

               10.7  Purchase  Agreement  dated
                     November  19,  1999 between the  Partnership
                     and  Boulevard  East, LLC  relating  to  the
                     property   at   1275  Johnson  Ferry   Road,
                     Marietta,    Georgia    (incorporated     by
                     reference to Exhibit 10.1 of Form 8-K  filed
                     with the Commission on February 10, 2000).

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K AND FORM 8-K/A.

          A. Exhibits -
                                  Description

             27   Financial Data Schedule for
                  year ended December 31, 1999.

          B.   Reports on Form 8-K and Form 8-K/A - None.


                           SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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.

                            AEI REAL ESTATE FUND XVI
                            Limited Partnership
                            By: AEI Fund Management XVI, Inc.
                                Its Managing General Partner


March 10, 2000              By: /s/ Robert P. Johnson
                                    Robert  P. Johnson, President and Director
                                   (Principal Executive Officer)



        Pursuant  to the requirements of the Securities  Exchange
Act  of  1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and  on
the dates indicated.

          Name                            Title                  Date


/s/ Robert P. Johnson  President (Principal Executive Officer) March 10, 2000
    Robert P. Johnson  and Sole Director of Managing General
                       Partner

/s/ Mark E. Larson     Executive Vice President, Treasurer     March 10, 2000
    Mark E. Larson     and Chief Financial Officer
                       (Principal Accounting Officer)