UNITED STATES
               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, 2001

                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,  2001  were
$558,453.

As  of  February 28, 2002, there were 13,262.85 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 $13,262,850.

               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)

        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 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  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 $1,468,504,
which  resulted in a net gain of $273,747.  At the time of  sale,
the  cost and related accumulated depreciation was $1,247,571 and
$52,814, respectively.

        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 negotiated to sell the property to an unrelated third
party, who assumed the restaurant operations from Texas.  On July
28, 2000, the sale closed with the Partnership receiving net sale
proceeds  of $311,882, which resulted in a net gain of $628.   At
the  time  of sale, the cost and related accumulated depreciation
was $450,109 and $138,855, respectively.

       In December, 1998, Gulf Coast Restaurants, Inc. (GCR), the
lessee of the Applebee's restaurant in Slidell, Louisiana,  filed
for reorganization.  GCR continued to make the lease payments  to
the Partnership under the supervision of the bankruptcy court.  A
reorganization plan was accepted by the Bankruptcy  Court,  which
provided  for  the  Lease to be assumed by GCR  and  assigned  to
another  operator who purchased the Partnership's  share  of  the
property.   The  reorganization  plan  also  provided   for   the
Partnership to collect all rents outstanding under the  terms  of
the  Lease.   On  October  25, 2000, the  sale  closed  with  the
Partnership  receiving  net  sale  proceeds  of  $960,230,  which
resulted  in  a net gain of $330,013.  At the time of  sale,  the
cost  and  related  accumulated  depreciation  was  $746,464  and
$116,247, respectively.

        In November, 2000, the Partnership sold 9,576 square feet
of  land  from  the  Fuddruckers' property  in  Omaha,  Nebraska,
pursuant  to  a  Right-Of-Way Agreement with the  City  of  Omaha
Public Works.  The Partnership received net proceeds of $216,593,
which  resulted in a gain of $168,838.  The original cost of  the
parcel of land was $47,755.  The Partnership believed the City of
Omaha  undervalued the land and negotiated to receive  additional
proceeds.  In March 2002, the City of Omaha approved a settlement
and paid the Partnership additional gross proceeds of $69,795.

        Due  to the easement and the resulting work on the  roads
adjacent to the Fuddruckers' property, the Partnership agreed  to
a temporary modification of rent payments through March 31, 2002.
Through  December  31,  2001,  the  modification  resulted  in  a
reduction of base rent of $43,002.  Due to the permanent  changes
to  the  property  caused by the easement,  the  Partnership  may
consider a long-term modification of the Lease.

ITEM 1.   DESCRIPTION OF BUSINESS.  (Continued)

        In  August, 2000, Renaissant Development Corp. (RDC), the
lessee of the Applebee's restaurant in Victoria, Texas filed  for
reorganization.   RDC closed the restaurant, rejected  the  Lease
and returned possession of the property to the Partnership.  As a
result,  the  Partnership  did  not  collect  scheduled  rent  of
$142,687  and  $68,000  in  2001 and 2000,  respectively.   These
amounts  were not accrued for financial reporting purposes.   The
Partnership has listed the property for sale or lease.  While the
property  is  vacant,  the Partnership is  responsible  for  real
estate taxes and other costs required to maintain the property.

        As  of  December 31, 2000, based on an analysis of market
conditions in the area, it was determined the fair value  of  the
Victoria  property  was approximately $800,000.   In  the  fourth
quarter  of  2000,  a  charge  to  operations  for  real   estate
impairment  of  $353,062 was recognized, which is the  difference
between the book value at December 31, 2000 of $1,153,062 and the
estimated  fair  value  of  $800,000.  The  charge  was  recorded
against the cost of the building and equipment.

         In   January,   1996,   the  Cheddar's   restaurant   in
Indianapolis, Indiana was destroyed by a fire.  The property will
not be rebuilt and the Partnership listed the land for sale.   As
of  December 31, 2000, 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 $50,000.  In
the  fourth  quarter  of 2000, a charge to  operations  for  real
estate  impairment  of  $124,747 was  recognized,  which  is  the
difference  between  the  book value  at  December  31,  2000  of
$174,747  and the estimated fair value of $50,000.  In the  third
quarter  of  2001, the Partnership recognized an additional  real
estate impairment of $50,000 to write down the book value of  the
land to zero.

Major Tenants

        During 2001, three tenants each contributed more than ten
percent  of  the Partnership's total rental revenue.   The  major
tenants  in aggregate contributed 67% of total rental revenue  in
2001.  It is anticipated that each major tenant will continue  to
contribute more than ten percent of total rental revenue in  2002
and future years.  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.

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.

Description of Properties

       The Partnership's properties are commercial, single tenant
buildings.  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, 2001.

                            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.     $ 44,772   $ 6.51

Grand Rapids Teachers                    Grand Rapids
Credit Union                               Teachers
 Wyoming, MI       5/1/87   $  626,240  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   $1,103,787  Fuddruckers, Inc. $102,079   $14.72

ITEM 2.   DESCRIPTION OF PROPERTIES.  (Continued)

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

Children's World
Daycare Center                            ARAMARK
 Sterling Heights, MI                   Educational
 (83.6514%)      11/25/87   $  729,486  Resources, Inc.   $116,363   $22.53

Jiffy Lube Auto Care Center
 Dallas, TX                             Jiffy Lube of
 (25%)           12/10/87   $  154,892  Maryland, Inc.    $ 21,822   $32.70

JEMCARE
 Arkansas Lane
 Arlington, TX   12/10/87   $  450,475  JEMCARE, Inc.     $ 43,125   $ 8.56

JEMCARE
 Matlock Avenue
 Arlington, TX   12/16/87   $  603,641  JEMCARE, Inc.     $ 50,164   $ 8.53

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

Applebee's Restaurant
 Victoria, TX     3/22/96   $1,335,555      (2)

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

        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 and the Cheddar's restaurant land.

        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 for 20 years, except for  the
Arby's  restaurant,  which has a Lease  term  of  15  years,  the
Creative Years daycare center, which has a Lease term of 13 years
and  the  Credit Union, which has a Lease term of 11 years.   The
initial  Lease  terms for the JEMCARE properties, which  were  to
expire on December 31, 2001, have been extended to March 31, 2002
and  may be extended further.  The Leases contain renewal options
which  may  extend the Lease term an additional 10 years,  except
for  the  Arby's restaurant, which has renewal options  that  may
extend  the  Lease  term  an additional  15  years,  the  JEMCARE
properties, which have renewal options that may extend the  Lease
term  an  additional  9 years and the Jiffy Lube,  which  has  no
renewal options.

ITEM 2.   DESCRIPTION OF PROPERTIES.  (Continued)

       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.

         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, all properties listed  above
were  100%  occupied except for the Applebee's restaurant,  which
was  100%  occupied until August, 2000 and the Cheddar's property
which was 100% vacant.

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, 2001, there were 1,429  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  2001, nine Limited Partners redeemed a  total  of
105.80  Partnership  Units for $26,612  in  accordance  with  the
Partnership  Agreement.  In prior years, a total of  165  Limited
Partners redeemed 1,629.35 Partnership Units for $1,088,794.  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 $18,268 and $12,112 were made to the
General Partners and $1,781,951 and $1,161,405 were made  to  the
Limited   Partners   in   2001  and  2000,   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 $1,558,612 and  $632,919  of
proceeds from property sales in 2001 and 2000, 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, 2001  and  2000,  the
Partnership  recognized rental income of $482,682  and  $716,615,
respectively.   During the same periods, the  Partnership  earned
investment  income  of  $75,771 and $105,086,  respectively.   In
2001,  rental income decreased mainly as a result of the loss  of
rent  from the Applebee's restaurant in Victoria, Texas  and  the
property sales discussed below.

       In December, 1998, Gulf Coast Restaurants, Inc. (GCR), the
lessee of the Applebee's restaurant in Slidell, Louisiana,  filed
for reorganization.  GCR continued to make the lease payments  to
the Partnership under the supervision of the bankruptcy court.  A
reorganization plan was accepted by the Bankruptcy  Court,  which
provided  for  the  Lease to be assumed by GCR  and  assigned  to
another  operator who purchased the Partnership's  share  of  the
property.   The  reorganization  plan  also  provided   for   the
Partnership to collect all rents outstanding under the  terms  of
the  Lease.   On  October  25, 2000, the  sale  closed  with  the
Partnership  receiving  net  sale  proceeds  of  $960,230,  which
resulted  in  a net gain of $330,013.  At the time of  sale,  the
cost  and  related  accumulated  depreciation  was  $746,464  and
$116,247, respectively.

        In  August, 2000, Renaissant Development Corp. (RDC), the
lessee of the Applebee's restaurant in Victoria, Texas filed  for
reorganization.   RDC closed the restaurant, rejected  the  Lease
and returned possession of the property to the Partnership.  As a
result,  the  Partnership  did  not  collect  scheduled  rent  of
$142,687  and  $68,000  in  2001 and 2000,  respectively.   These
amounts  were not accrued for financial reporting purposes.   The
Partnership has listed the property for sale or lease.  While the
property  is  vacant,  the Partnership is  responsible  for  real
estate taxes and other costs required to maintain the property.

        As  of  December 31, 2000, based on an analysis of market
conditions in the area, it was determined the fair value  of  the
Victoria  property  was approximately $800,000.   In  the  fourth
quarter  of  2000,  a  charge  to  operations  for  real   estate
impairment  of  $353,062 was recognized, which is the  difference
between the book value at December 31, 2000 of $1,153,062 and the
estimated  fair  value  of  $800,000.  The  charge  was  recorded
against the cost of the building and equipment.

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

         In   January,   1996,   the  Cheddar's   restaurant   in
Indianapolis, Indiana was destroyed by a fire.  The property will
not be rebuilt and the Partnership listed the land for sale.   As
of  December 31, 2000, 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 $50,000.  In
the  fourth  quarter  of 2000, a charge to  operations  for  real
estate  impairment  of  $124,747 was  recognized,  which  is  the
difference  between  the  book value  at  December  31,  2000  of
$174,747  and the estimated fair value of $50,000.  In the  third
quarter  of  2001, the Partnership recognized an additional  real
estate impairment of $50,000 to write down the book value of  the
land to zero.

        During  the years ended December 31, 2001 and  2000,  the
Partnership   paid   Partnership   administration   expenses   to
affiliated parties of $207,424 and $209,235, 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  $86,662 and $69,499, 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  increase
in  these expenses in 2001, when compared to 2000, is the  result
of expenses incurred in 2001 related to the Applebee's restaurant
in Victoria, Texas.

       As of December 31, 2001, the Partnership's annualized cash
distribution   rate  was  6%,  based  on  the  Adjusted   Capital
Contribution.   Distributions of Net Cash  Flow  to  the  General
Partners were subordinated to the Limited Partners as required in
the  Partnership  Agreement.  As a result, 99%  of  distributions
were  allocated  to  Limited  Partners  and  1%  to  the  General
Partners.

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

Liquidity and Capital Resources

        During  2001,  the Partnership's cash balances  decreased
$1,737,452  as a result of distributions made in excess  of  cash
generated  from  operating  activities.   Net  Cash  provided  by
operating activities decreased from $640,526 in 2000 to  $190,937
in  2001  mainly  as  a result of a decrease  in  income  and  an
increase in Partnership administration expenses in 2001  and  net
timing differences in the collection of payments from the lessees
and the payment of expenses.

       During the year ended December 31, 2000, net cash provided
by  investing  activities was $2,957,209 which  represented  cash
flow generated from the sale of real estate.

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

        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 $1,468,504,
which  resulted in a net gain of $273,747.  At the time of  sale,
the  cost and related accumulated depreciation was $1,247,571 and
$52,814, respectively.

        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 negotiated to sell the property to an unrelated third
party, who assumed the restaurant operations from Texas.  On July
28, 2000, the sale closed with the Partnership receiving net sale
proceeds  of $311,882, which resulted in a net gain of $628.   At
the  time  of sale, the cost and related accumulated depreciation
was $450,109 and $138,855, respectively.

        In November, 2000, the Partnership sold 9,576 square feet
of  land  from  the  Fuddruckers' property  in  Omaha,  Nebraska,
pursuant  to  a  Right-Of-Way Agreement with the  City  of  Omaha
Public Works.  The Partnership received net proceeds of $216,593,
which  resulted in a gain of $168,838.  The original cost of  the
parcel of land was $47,755.  The Partnership believed the City of
Omaha  undervalued the land and negotiated to receive  additional
proceeds.  In March 2002, the City of Omaha approved a settlement
and paid the Partnership additional gross proceeds of $69,795.

        Due  to the easement and the resulting work on the  roads
adjacent to the Fuddruckers' property, the Partnership agreed  to
a temporary modification of rent payments through March 31, 2002.
Through  December  31,  2001,  the  modification  resulted  in  a
reduction of base rent of $43,002.  Due to the permanent  changes
to  the  property  caused by the easement,  the  Partnership  may
consider a long-term modification of the Lease.

         During   2001  and  2000,  the  Partnership  distributed
$1,574,356  and $639,312 of net sale proceeds to the Limited  and
General  Partners,  which represented  a  return  of  capital  of
$116.62  and  $47.10 per Limited Partnership Unit,  respectively.
The  remainder of the sale proceeds will be distributed in future
periods.

       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.   In 2001, distributions were higher when compared to  2000
because more sales proceeds were distributed in 2001.

        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  2001, nine Limited Partners redeemed a  total  of
105.80  Partnership  Units for $26,612  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using Net Cash Flow from operations.  In prior years, a total  of
165  Limited  Partners  redeemed 1,629.35 Partnership  Units  for
$1,088,794.   The  redemptions  increase  the  remaining  Limited
Partners' ownership interest in the Partnership.

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

       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.

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:

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

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

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

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

    the effect of tenant defaults; and

    the  condition of the industries in which the tenants of
    properties 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, 2001 and 2000

Statements for the Years Ended December 31, 2001 and 2000:

     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, 2001 and 2000 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   auditing
standards  generally accepted in the United  States  of  America.
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, 2001 and 2000, and the results of its operations and its cash
flows  for  the  years then ended, in conformity with  accounting
principles generally accepted in the United States of America.




                                /s/ BOULAY, HEUTMAKER, ZIBELL & CO. P.L.L.P
Minneapolis,  Minnesota             Boulay, Heutmaker, Zibell & Co. P.L.L.P.
January 23, 2002                     Certified Public Accountants


<PAGE>
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                          BALANCE SHEET

                           DECEMBER 31

                             ASSETS

                                                      2001          2000
CURRENT ASSETS:
  Cash and Cash Equivalents                       $ 1,102,307   $ 2,839,759
  Receivables                                          30,543        10,525
                                                   -----------   -----------
      Total Current Assets                          1,132,850     2,850,284
                                                   -----------   -----------
INVESTMENTS IN REAL ESTATE:
  Land                                              1,825,154     1,825,154
  Buildings and Equipment                           3,961,868     3,961,868
  Accumulated Depreciation                         (2,079,895)   (1,966,858)
                                                   -----------   -----------
                                                    3,707,127     3,820,164
  Real Estate Held for Sale                                 0        50,000
                                                   -----------   -----------
      Net Investments in Real Estate                3,707,127     3,870,164
                                                   -----------   -----------
          Total Assets                            $ 4,839,977   $ 6,720,448
                                                   ===========   ===========

                      LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable to AEI Fund Management, Inc.            $    79,957   $   124,238
  Distributions Payable                               127,335       228,893
  Deferred Income                                      29,743        26,982
                                                   -----------   -----------
      Total Current Liabilities                       237,035       380,113
                                                   -----------   -----------

DEFERRED INCOME - Net of Current Portion               58,457        70,349

PARTNERS' CAPITAL (DEFICIT):
  General Partners                                    (42,383)      (66,498)
  Limited Partners, $1,000 Unit value;
     15,000 Units authorized and issued;
     13,265 and 13,371 Units outstanding
     in 2001 and 2000, respectively                 4,586,868     6,336,484
                                                   -----------   -----------
      Total Partners' Capital                       4,544,485     6,269,986
                                                   -----------   -----------
        Total Liabilities and Partners' Capital   $ 4,839,977   $ 6,720,448
                                                   ===========   ===========

 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


                                                    2001           2000

INCOME:
  Rent                                          $   482,682     $   716,615
  Investment Income                                  75,771         105,086
                                                 -----------     -----------
      Total Income                                  558,453         821,701
                                                 -----------     -----------

EXPENSES:
  Partnership Administration - Affiliates           207,424         209,235
  Partnership Administration and Property
     Management - Unrelated Parties                  86,662          69,499
  Depreciation                                      113,037         146,648
  Real Estate Impairment                             50,000         477,809
                                                 -----------     -----------
      Total Expenses                                457,123         903,191
                                                 -----------     -----------

OPERATING INCOME (LOSS)                             101,330         (81,490)

GAIN ON SALE OF REAL ESTATE                               0         773,226
                                                 -----------     -----------
NET INCOME                                      $   101,330     $   691,736
                                                 ===========     ===========

NET INCOME ALLOCATED:
  General Partners                              $    42,383     $     6,917
  Limited Partners                                   58,947         684,819
                                                 -----------     -----------
                                                $   101,330     $   691,736
                                                 ===========     ===========

NET INCOME PER LIMITED PARTNERSHIP UNIT
(13,344 and 13,444 weighted average Units
outstanding in 2001 and 2000, respectively)     $      4.42     $     50.94
                                                 ===========     ===========


 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


                                                   2001          2000

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                   $  101,330     $  691,736

  Adjustments To Reconcile Net Income
 To Net Cash Provided By Operating Activities:
     Depreciation                                 113,037        146,648
     Real Estate Impairment                        50,000        477,809
     Gain on Sale of Real Estate                        0       (773,226)
     (Increase) Decrease in Receivables           (20,018)        24,659
     Increase (Decrease) in Payable to
        AEI Fund Management, Inc.                 (44,281)        69,702
     Increase (Decrease) in Deferred Income        (9,131)         3,198
                                               -----------    -----------
       Total Adjustments                           89,607        (51,210)
                                               -----------    -----------
       Net Cash Provided By
          Operating Activities                    190,937        640,526
                                               -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from Sale of Real Estate                     0      2,957,209
                                               -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (Decrease) in Distributions Payable   (101,558)        98,035
  Distributions to Partners                    (1,799,950)    (1,173,136)
  Redemption Payments                             (26,881)       (38,121)
                                               -----------    -----------
       Net Cash Used For
          Financing Activities                 (1,928,389)    (1,113,222)
                                               -----------    -----------
NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                        (1,737,452)     2,484,513

CASH AND CASH EQUIVALENTS, beginning of period  2,839,759        355,246
                                               -----------    -----------
CASH AND CASH EQUIVALENTS, end of period      $ 1,102,307    $ 2,839,759
                                               ===========    ===========


 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, 1999  $(61,303)  $6,850,810   $6,789,507   13,468.15

  Distributions              (11,731)  (1,161,405)  (1,173,136)

  Redemption Payments           (381)     (37,740)     (38,121)     (97.50)

  Net Income                   6,917      684,819      691,736
                             --------   ----------   ----------  ----------
BALANCE, December 31, 2000   (66,498)   6,336,484    6,269,9861   3,370.65

  Distributions              (17,999)  (1,781,951)  (1,799,950)

  Redemption Payments           (269)     (26,612)     (26,881)    (105.80)

  Net Income                  42,383       58,947      101,330
                             --------   ----------   ----------  ----------
BALANCE, December 31, 2001  $(42,383)  $4,586,868   $4,544,485   13,264.85
                             ========   ==========   ==========  ==========



 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, 2001 AND 2000

(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, 2001 AND 2000

(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, 2001 AND 2000

(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

       The  Partnership's  cash  is deposited  primarily  in  one
       financial institution and at times during the year it  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  rent increases based on 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, 2001 AND 2000

(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.

     Newly Issued Pronouncements

       The   Financial  Accounting  Standards  Board  has  issued
       Statement  of  Financial  Accounting  Standards  No.  143,
       Accounting  for  Asset Retirement Obligations  (SFAS  143)
       and  Statement of Financial Accounting Standards No.  144,
       Accounting  for the Impairment or Disposal  of  Long-Lived
       Assets  (SFAS  144).  SFAS 143 will be applicable  to  the
       Partnership  in  the year ended December 31,  2003.   SFAS
       144  will  be  applicable to the Partnership in  the  year
       ended   December  31,  2002.   Management   is   currently
       evaluating  the  impact of SFAS 143 and SFAS  144  on  its
       financial statements.

(3)  Related Party Transactions -

     The  Partnership owns an 83.6514% interest in  a  Children's
     World  Daycare  Center.   The  remaining  interest  in  this
     property  is  owned  by AEI Real Estate  Fund  85-B  Limited
     Partnership,   an   affiliate  of  the   Partnership.    The
     Partnership owns 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 owned a 35% interest in  a
     Sports  City Cafe.  The remaining interest in this  property
     was  owned by AEI Real Estate Fund XVII Limited Partnership.
     The  Partnership  owned  a  73% interest  in  an  Applebee's
     restaurant in Slidell, Louisiana.  The remaining interest in
     this  property  was  owned by AEI  Real  Estate  Fund  XVIII
     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 REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(3)  Related Party Transactions - (Continued)

     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

                                                 2001          2000

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.                                    $ 207,424     $ 209,235
                                                ========      ========
b.AEI and AFM are reimbursed for all direct
  expenses they have paid on the Partnership's
  behalf to third parties relating to Partnership
  administration and property management.
  These expenses included printing costs, legal
  and filing fees, direct administrative costs,
  outside audit and accounting costs, taxes,
  insurance and other property costs.          $  86,662     $  69,499
                                                ========      ========
c.AEI is reimbursed for all costs incurred in
  connection with the sale of property.        $       0     $  15,030
                                                ========      ========


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


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(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  for 20 years, except for the Arby's  restaurant,
     which  has  a  Lease  term of 15 years, the  Creative  Years
     daycare  center, which has a Lease term of 13 years and  the
     Credit  Union,  which has a Lease term  of  11  years.   The
     initial  Lease terms for the JEMCARE properties, which  were
     to  expire on December 31, 2001, have been extended to March
     31,  2002  and may be extended further.  The Leases  contain
     renewal   options  which  may  extend  the  Lease  term   an
     additional 10 years, except for the Arby's restaurant, which
     has  renewal  options  that may extend  the  Lease  term  an
     additional  15  years,  the JEMCARE properties,  which  have
     renewal options that may extend the Lease term an additional
     9  years  and the Jiffy Lube, which has no renewal  options.
     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 commercial,  single-tenant
     buildings.    The   Creative  Years   daycare   center   was
     constructed  in 1984.  The Omaha Fuddruckers restaurant  was
     constructed  in 1985 and remodeled in 1987.  The  Applebee's
     restaurant in Victoria, Texas was constructed in 1996.   All
     other  properties were constructed in 1986,  1987  or  1988.
     All properties were acquired in 1987 or 1988, except for the
     Victoria  Applebee's restaurant which was acquired in  1996.
     There   have  been  no  costs  capitalized  as  improvements
     subsequent to the acquisitions.

     The cost of the properties not held for sale and the related
     accumulated  depreciation  at  December  31,  2001  are   as
     follows:
                                        Buildings and            Accumulated
Property                          Land    Equipment     Total    Depreciation

Creative Years, Houston, TX  $  147,753  $  335,375  $  483,128  $  185,097
Credit Union, Wyoming, MI       166,434     459,806     626,240     255,345
Arby's, Grand Rapids, MI        195,229     457,651     652,880     254,149
Fuddruckers, Omaha, NE          260,157     843,630   1,103,787     535,230
Children's World,
  Sterling Heights, MI          138,133     591,353     729,486     296,746
Jiffy Lube, Dallas, TX           65,919      88,973     154,892      47,917
JEMCARE, Arlington, TX          148,214     302,261     450,475     158,840
JEMCARE, Arlington, TX          323,671     279,970     603,641     145,474
Applebee's, Victoria, TX        379,644     602,849     982,493     201,097
                              ----------  ----------  ----------  ----------
                             $1,825,154  $3,961,868  $5,787,022  $2,079,895
                              ==========  ==========  ==========  ==========



          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(4)  Investments in Real Estate - (Continued)

     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
     $1,468,504,  which resulted in a net gain of  $273,747.   At
     the   time   of  sale,  the  cost  and  related  accumulated
     depreciation was $1,247,571 and $52,814, respectively.

     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 negotiated to sell the property to an  unrelated
     third  party,  who  assumed the restaurant  operations  from
     Texas.   On  July  28,  2000,  the  sale  closed  with   the
     Partnership  receiving net sale proceeds of $311,882,  which
     resulted  in a net gain of $628.  At the time of  sale,  the
     cost  and related accumulated depreciation was $450,109  and
     $138,855, respectively.

     In  December, 1998, Gulf Coast Restaurants, Inc. (GCR),  the
     lessee  of  the Applebee's restaurant in Slidell, Louisiana,
     filed  for reorganization.  GCR continued to make the  lease
     payments  to  the Partnership under the supervision  of  the
     bankruptcy court.  A reorganization plan was accepted by the
     Bankruptcy Court, which provided for the Lease to be assumed
     by  GCR  and assigned to another operator who purchased  the
     Partnership's  share  of the property.   The  reorganization
     plan  also provided for the Partnership to collect all rents
     outstanding  under the terms of the Lease.  On  October  25,
     2000,  the  sale closed with the Partnership  receiving  net
     sale  proceeds of $960,230, which resulted in a net gain  of
     $330,013.   At  the  time  of sale,  the  cost  and  related
     accumulated   depreciation  was   $746,464   and   $116,247,
     respectively.

     In November, 2000, the Partnership sold 9,576 square feet of
     land  from  the  Fuddruckers' property in  Omaha,  Nebraska,
     pursuant to a Right-Of-Way Agreement with the City of  Omaha
     Public  Works.   The Partnership received  net  proceeds  of
     $216,593,  which  resulted  in  a  gain  of  $168,838.   The
     original  cost  of  the  parcel of land  was  $47,755.   The
     Partnership believed the City of Omaha undervalued the  land
     and  negotiated  to receive additional proceeds.   In  March
     2002,  the City of Omaha approved a settlement and paid  the
     Partnership additional gross proceeds of $69,795.

     Due  to  the  easement and the resulting work on  the  roads
     adjacent  to  the  Fuddruckers'  property,  the  Partnership
     agreed  to a temporary modification of rent payments through
     March 31, 2002.  Through December 31, 2001, the modification
     resulted in a reduction of base rent of $43,002.  Due to the
     permanent  changes to the property caused by  the  easement,
     the Partnership may consider a long-term modification of the
     Lease.

     During 2001 and 2000, the Partnership distributed $1,574,356
     and $639,312 of net sale proceeds to the Limited and General
     Partners,  which represented a return of capital of  $116.62
     and  $47.10 per Limited Partnership Unit, respectively.  The
     remainder of the sale proceeds will be distributed in future
     periods.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(4)  Investments in Real Estate - (Continued)

     In  August,  2000, Renaissant Development Corp.  (RDC),  the
     lessee of the Applebee's restaurant in Victoria, Texas filed
     for reorganization.  RDC closed the restaurant, rejected the
     Lease  and  returned  possession  of  the  property  to  the
     Partnership.  As a result, the Partnership did  not  collect
     scheduled  rent  of $142,687 and $68,000 in 2001  and  2000,
     respectively.  These amounts were not accrued for  financial
     reporting purposes.  The Partnership has listed the property
     for  sale  or  lease.   While the property  is  vacant,  the
     Partnership is responsible for real estate taxes  and  other
     costs required to maintain the property.

     As  of  December  31, 2000, based on an analysis  of  market
     conditions in the area, it was determined the fair value  of
     the  Victoria property was approximately $800,000.   In  the
     fourth  quarter  of  2000, a charge to operations  for  real
     estate  impairment of $353,062 was recognized, which is  the
     difference  between the book value at December 31,  2000  of
     $1,153,062  and the estimated fair value of  $800,000.   The
     charge  was  recorded against the cost of the  building  and
     equipment.

     In  January, 1996, the Cheddar's restaurant in Indianapolis,
     Indiana was destroyed by a fire.  The property will  not  be
     rebuilt and the Partnership listed the land for sale.  As of
     December 31, 2000, 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
     $50,000.   In  the  fourth quarter  of  2000,  a  charge  to
     operations  for  real  estate  impairment  of  $124,747  was
     recognized, which is the difference between the  book  value
     at  December  31,  2000 of $174,747 and the  estimated  fair
     value  of  $50,000.   In  the third  quarter  of  2001,  the
     Partnership recognized an additional real estate  impairment
     of $50,000 to write down the book value of the land to zero.

     The   minimum  future  rentals  on  the  Leases  for   years
     subsequent to December 31, 2001 are as follows:

                       2002          $   279,204
                       2003              223,922
                       2004              177,350
                       2005              177,350
                       2006              177,350
                       Thereafter        128,163
                                      -----------
                                     $ 1,163,339
                                      ===========

     In  2001  and  2000,  the Partnership recognized  contingent
     rents of $112,407 and $33,524, respectively.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(5)  Deferred Income -

     In  June,  1994, Fuddruckers, Inc., the restaurant concept's
     franchisor,  acquired  the  operations  of  the  Fuddruckers
     restaurant  in  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 $167,699 to $145,081.  The Partnership could
     receive  additional  rent in the  future  if  10%  of  gross
     receipts  from  the  property  exceed  the  base  rent.   In
     consideration  for the lease assumption and  amendment,  the
     Partnership  received a lump sum payment from  the  original
     lessee of $159,539.  The lump sum payment will be recognized
     as income over the remainder of the Lease term which expires
     November 30, 2007 using the straight line method.

     As  of  December  31,  2001 and 2000,  the  Partnership  had
     recognized $89,190 and $77,298 of the payment for the  Omaha
     property  as  income.   The  remaining  deferred  income  of
     $17,851   was   prepaid  rent  related  to   certain   other
     Partnership properties as of December 31, 2001.

(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:

                                                   2001       2000
      Tenants                Industry

     ARAMARK Educational
         Resources, Inc.          Child Care   $ 114,415   $ 111,692
     Fuddruckers, Inc.            Restaurant     113,972     143,701
     JEMCARE, Inc.                Child Care      93,289      93,289
     Renaissant Development Corp. Restaurant         N/A      95,199
     Gulf Coast Restaurants, Inc. Restaurant           0      98,762
                                                ---------   ---------

     Aggregate rent revenue of major tenants   $ 321,676   $ 542,643
                                                =========   =========

     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue               67%         76%
                                                =========   =========


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(7) Partners' Capital -

     Cash  distributions of $18,268 and $12,112 were made to  the
     General Partners and $1,781,951 and $1,161,405 were made  to
     the  Limited Partners for the years ended December 31,  2001
     and 2000, respectively.  The Limited Partners' distributions
     represent  $133.54 and $86.39 per Limited  Partnership  Unit
     outstanding  using 13,344 and 13,444 weighted average  Units
     in 2001 and 2000, respectively.  The distributions represent
     $2.41  $48.12 per Unit of Net Income and $131.13 and  $38.27
     per  Unit of return of contributed capital in 2001 and 2000,
     respectively.

     As  part  of  the  Limited  Partner distributions  discussed
     above,  the Partnership distributed $1,558,612 and  $632,919
     of   proceeds  from  property  sales  in  2001   and   2000,
     respectively.    The  distributions  reduced   the   Limited
     Partners' Adjusted Capital Contributions.

     Distributions  of  Net  Cash Flow to  the  General  Partners
     during  2001  and  2000  were subordinated  to  the  Limited
     Partners  as  required in the Partnership Agreement.   As  a
     result,  99% of distributions 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  2001,  nine  Limited Partners redeemed  a  total  of
     105.80 Partnership Units for $26,612 in accordance with  the
     Partnership Agreement  The Partnership acquired these  Units
     using  Net  Cash  Flow from operations.   In  2000,  sixteen
     Limited Partners redeemed a total of 97.5 Partnership  Units
     for $37,740.  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
     $693.84 per original $1,000 invested.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(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:

                                                2001         2000
     Net Income for Financial
      Reporting Purposes                     $ 101,330   $  691,736

     Depreciation for Tax Purposes
      (Over) Under Depreciation for Financial
      Reporting Purposes                        (4,105)       7,168

     Income Accrued for Tax Purposes
      Over (Under) Income for Financial
      Reporting Purposes                       (77,830)      57,167

     Property Expenses for Tax Purposes
      (Over) Under Expenses for Financial
      Reporting Purposes                       (20,050)      12,280

     Real Estate Impairment Loss
      Not Recognized for Tax Purposes           50,000      477,809

     Gain on Sale of Real Estate for Tax
      Purposes Over (Under) Gain for Financial
      Reporting Purposes                        62,595     (119,582)
                                              ---------   ----------
           Taxable Income to Partners        $ 111,940   $1,126,578
                                              =========   ==========


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 2001 AND 2000

(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:

                                               2001          2000

     Partners' Capital for
      Financial Reporting Purposes         $ 4,544,485   $ 6,269,986

     Adjusted Tax Basis of Investments
      in Real Estate Over Net Investments
      in Real Estate for Financial
      Reporting Purposes                       863,576       817,681

     Income Accrued for Tax Purposes Over
      Income for Financial
      Reporting Purposes                       197,340       212,575

     Property Expenses for Tax Purposes
      Under Expenses for Financial
      Reporting Purposes                             0        20,050

     Syndication Costs Treated as
      Reduction of Capital for
      Financial Reporting Purposes           1,981,686     1,981,686
                                            -----------   -----------
           Partners' Capital for
              Tax Reporting Purposes       $ 7,587,087   $ 9,301,978
                                            ===========   ===========
(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:

                                  2001                  2000
                         Carrying       Fair       Carrying      Fair
                          Amount        Value       Amount       Value

     Cash                $      195   $      195   $      339  $      339
     Money Market Funds   1,102,112    1,102,112    2,839,420   2,839,420
                          ----------   ----------   ----------  ----------
      Total Cash and
       Cash Equivalents  $1,102,307   $1,102,307   $2,839,759  $2,839,759
                          ==========   ==========   ==========  ==========

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 57, 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, 2002.  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.,  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  thirteen  limited partnerships and a managing member  in  two
LLCs.

        Mark  E.  Larson,  age 49, is Executive  Vice  President,
Treasurer  and  Chief Financial Officer and has been  elected  to
continue in these positions until December, 2002.  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, 2002.  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 28, 2002:

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

   AEI Fund Management XVI, Inc.            2            *
   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, 2001.

Person or Entity                                      Amount Incurred From
 Receiving                     Form and Method    Inception (February 6, 1987)
Compensation                   of Compensation        To December 31, 2001

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, 2001

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


General Partners and  Reimbursement at Cost for all          $3,082,975
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 and  Reimbursement at Cost for all expenses $   30,850
Affiliates            related to the disposition of the
                      Fund's properties.

General Partners      1% of Net Cash Flow in any fiscal year $  119,330
                      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      15% of distribution of Net Proceeds of $   58,548
                      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, 2001, 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  Occupancy  Agreement dated February 17,  2000  between
     the   Partnership,  AEI  Real  Estate  Fund   XVII   Limited
     Partnership, Nick Mehmeti and Duncan Burch relating  to  the
     property  at 3808 Towne Crossing Boulevard, Mesquite,  Texas
     (incorporated  by reference to Exhibit 10.1 of  Form  10-QSB
     filed on May 5, 2000).

     10.2  Purchase  Agreement dated April 5,  2000  between  the
     Partnership,  AEI Real Estate Fund XVII Limited Partnership,
     Nick  Mehmeti and Duncan Burch relating to the  property  at
     3808    Towne    Crossing   Boulevard,    Mesquite,    Texas
     (incorporated  by reference to Exhibit 10.2 of  Form  10-QSB
     filed on May 5, 2000).

     10.3  Asset  Purchase  Agreement dated  September  18,  2000
     between  the Partnership, AEI Real Estate Fund XVIII Limited
     Partnership, and Southern River Restaurants LLC relating  to
     the  property  at 850 I-10 Service Road, Slidell,  Louisiana
     (incorporated  by reference to Exhibit 10.1 of  Form  10-QSB
     filed on November 7, 2000).

         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 8, 2002               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 8, 2002
   Robert P. Johnson  and Sole Director of Managing General
                      Partner

/s/Mark E. Larson     Executive Vice President, Treasurer      March 8, 2002
   Mark E. Larson     and Chief Financial Officer
                      (Principal Accounting Officer)