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, 1995
                                
                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)

                          (612) 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,  1995  were
$1,086,854.

As  of  February 29, 1996, there were 14,107.70 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 $14,107,700.


               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.   It is anticipated that the Partnership will  sell  its
properties  within twelve years after acquisition.  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  noncancelable  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.

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

ITEM 1.   DESCRIPTION OF BUSINESS. (Continued)

        The  Partnership owns a 30.8078% interest in the  Sizzler
restaurant  in  Cincinnati,  Ohio.   In  November,  1993,   after
reviewing   the  lessee's  operating  results,  the   Partnership
determined  that  the  lessee would  be  unable  to  operate  the
restaurant  in  a  manner capable of maximizing the  restaurant's
sales.   Consequently,  at the direction of  the  Partnership,  a
multi-unit   restaurant  operator  assumed  operation   of   this
restaurant while the Partnership reviewed the available  options.
In  January,  1994,  the Partnership closed  the  restaurant  and
listed  it  for sale or lease.  While the property is  being  re-
leased  or  sold,  the Partnership is responsible  for  the  real
estate taxes and other costs required to maintain the property.

       In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor,   acquired   the  operations   of   the   Fuddruckers
restaurants  in  St.  Louis, Missouri and  Omaha,  Nebraska,  and
assumed the lease obligations from the original lessee.  As  part
of  the  agreement, the Partnership amended the Leases to  reduce
the  base  rent.   In consideration for the lease assumption  and
amendment, the Partnership received a lump sum payment  from  the
original lessee of $299,723.  Fuddruckers, Inc. is owned by  DAKA
International,  which has a net worth in excess of  $31  million,
making it a much higher credit lessee than the original lessee.

        The  Partnership owns a 35% interest in a  J.T.  McCord's
restaurant  in  Mesquite, Texas and a 100%  interest  in  a  J.T.
McCord's  restaurant  in Irving, Texas.  In December,  1995,  the
Partnership  took possession of the properties after  the  lessee
was  unable  to  perform  under the  terms  of  the  Lease.   The
properties  are  currently listed for sale or lease.   While  the
properties  are  being  re-leased or  sold,  the  Partnership  is
responsible for the real estate taxes and other costs required to
maintain the properties.

        The  Partnership also owns a 55.0958% interest in a  J.T.
McCord's restaurant in Waco, Texas, which was previously  closed.
In June 1995, the Partnership re-leased the restaurant to Tex-Mex
Cocina  of Waco, L.C.  The Lease Agreement has a primary term  of
eighteen  months with an annual rental payment of  $29,752.   The
Partnership could also receive additional rent if gross  receipts
from  the  property exceed certain specified amounts.  The  Lease
contains  renewal  options which may extend  the  lease  term  an
additional 10 years.  The property is now operated as a  Zapata's
Cantina & Cafe.

       In December, 1994, the lessee of the Applebee's restaurant
in  Charleston, South Carolina, exercised an option in the  Lease
Agreement  to purchase the property.  On December 15,  1994,  the
sale  closed with the Partnership receiving net sale proceeds  of
$1,613,288 which resulted in a net gain of $691,525.  At the time
of  sale,  the cost and related accumulated depreciation  of  the
property was $1,126,780 and $205,017, respectively.

       In March, 1995, the lessee of the Applebee's restaurant in
Columbia,  South  Carolina, exercised  an  option  in  the  Lease
Agreement to purchase the property.  On July 28, 1995,  the  sale
closed  with  the  Partnership receiving  net  sale  proceeds  of
$990,453  which resulted in a net gain of $437,915.  At the  time
of  sale,  the cost and related accumulated depreciation  of  the
property was $723,823 and $171,285, respectively.

       On October 25, 1995, the Partnership sold two of the Jiffy
Lube Auto Care Centers to the lessee.  The Partnership recognized
net  sale proceeds of $322,443, which resulted in a net  gain  of
$80,500  for  the Jiffy Lube in Garland, Texas.  At the  time  of
sale,  the  cost  and  related accumulated  depreciation  of  the
property was $301,884 and $59,941, respectively.  The Partnership
recognized net sale proceeds of $161,218, which resulted in a net
gain of $35,705 for one of the Jiffy Lube's in Dallas, Texas.  At
the  time  of sale, the cost and related accumulated depreciation
of the property was $154,781 and $29,268.

ITEM 1.   DESCRIPTION OF BUSINESS. (Continued)

       In July 1995, the Partnership entered into an agreement to
sell  the Super 8 Motel in Hot Springs, Arkansas, to the  lessee.
The  sale  price for the Partnership's interest in  the  property
will  be approximately $680,000, which will result in a net  gain
of   approximately  $220,000.   As  of  December  31,  1995,  the
Partnership  had received a $20,000 non-refundable earnest  money
deposit  and  recognized  a  gain of  $18,534.   The  Partnership
anticipates the sale will close on March 29, 1996.

         In   January,   1996,   the  Cheddar's   restaurant   in
Indianapolis,  Indiana was destroyed by a fire.  The  Partnership
has reached a preliminary agreement with the tenant and insurance
company  which calls for termination of the Lease, demolition  of
the  building  and  payment to the Partnership  of  approximately
$428,000 for the building and equipment and approximately $50,000
for  lost  rent.   The  property will  not  be  rebuilt  and  the
Partnership will list the land for sale.  The Partnership's  cost
and   related  accumulated  depreciation  in  the  building   and
equipment  at  December  31,  1995  was  $496,967  and  $177,343,
respectively.   The settlement would result  in  a  net  gain  of
approximately $108,376.  The Partnership's cost of  the  land  is
$253,747.

        In  November,  1995,  the  Partnership  entered  into  an
Agreement  to  purchase  an Applebee's  restaurant  in  Victoria,
Texas.  The purchase price will be approximately $1,314,000.  The
property  will  be  leased to Renaissant Development  Corporation
under  a  Lease  Agreement with a primary term of  20  years  and
annual rental payments of approximately $151,000.

Major Tenants

        During  1995,  two  of  the  Partnership's  lessees  each
contributed  more  than  ten percent of the  Partnership's  total
rental  revenue.  The major tenants in aggregate contributed  36%
of  the  Partnership's  total rental  revenue  in  1995.   It  is
anticipated  that, based on the minimum rental payments  required
under  the  leases, each major tenant will continue to contribute
more  than ten percent of the Partnership's total rental  revenue
in  1996 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 all commercial,  single
tenant  buildings.  All the properties were acquired on  a  debt-
free  basis and are leased to various tenants under noncancelable
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, 1995.


                                    Total Property
                        Purchase      Acquisition                 Annual Lease
Property                  Date          Costs         Lessee         Payment

Creative Years Early                               Creative Years
Learning Center                                    Early Learning
  Houston, TX            4/8/87      $  483,128    Centers, Inc.     $ 60,773

Grand Rapids Teachers                              Grand Rapids
Credit Union                                         Teachers
  Wyoming, MI            5/1/87      $  626,239    Credit Union      $ 30,000

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

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


ITEM 2.   PROPERTIES. (Continued)

                                    Total Property
                        Purchase      Acquisition                  Annual Lease
Property                  Date           Costs        Lessee         Payment

Children's World
Daycare Center                                       Children's
  Sterling Heights, MI                             World Learning
   (83.6514%)          11/25/87      $  729,486     Centers, Inc.    $102,553

Jiffy Lube Auto Care Center
Westmoreland Avenue                                   Jiffy Lube
  Dallas, TX                                      International of
    (25%)              12/10/87      $  154,891   of Maryland, Inc. $ 18,975

JEMCARE
Arkansas Lane
  Arlington, TX        12/10/87      $  450,475   JEMCARE, Inc.     $ 52,148

Zapata's Cantina & Cafe
  Waco, TX                                        Tex-Mex Cocina
  (55.0958%)           12/16/87      $  674,285    of Waco, L.C.    $ 29,752

J.T. McCord's Restaurant
  Irving, TX           12/16/87      $1,147,333        (F1)

J.T. McCord's Restaurant
  Mesquite, TX
  (35%)                12/16/87      $  520,109        (F1)

JEMCARE
  Matlock Avenue
  Arlington, TX        12/16/87      $  603,641     JEMCARE, Inc.   $ 43,272

Cheddar's Restaurant
  Indianapolis, IN                                   Phaedra
   (50%)                2/16/88      $  750,714  Partners III, Ltd. $ 99,375

Fuddruckers Restaurant
  St. Louis, MO
   (40%)                3/25/88      $  761,053  Fuddruckers, Inc.  $ 92,164

Super 8 Motel
  Hot Springs, AR                                      Motel
   (50%)                4/11/88      $  583,653   Developers, Inc.  $ 91,887

Sizzler Restaurant
  Cincinnati, OH
   (30.8078%)           1/30/90      $  468,140        (F1)

ITEM 2.   PROPERTIES. (Continued)

                                    Total Property
                        Purchase      Acquisition                 Annual Lease
Property                  Date           Costs        Lessee         Payment

Applebee's Restaurant                           Southland Restaurant
  Slidell, LA                                       Development
  (73%)                 5/5/93       $  746,465    Company, L.L.C.   $103,888



(F1)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  in  Sterling
Heights,  Michigan.  AEI Real Estate Fund XV Limited  Partnership
owns the remaining interest in the restaurant in Waco, Texas, the
Fuddrucker's restaurant in St. Louis, Missouri and  the  Super  8
Motel.   AEI Real Estate Fund XVII Limited Partnership  owns  the
remaining interests in the Jiffy Lube property, the J.T. McCord's
restaurant in Mesquite, Texas, and the Cheddar's restaurant.  AEI
Real  Estate  Funds XVII and XVIII Limited Partnerships  own  the
remaining  interest in the Sizzler restaurant.  AEI  Real  Estate
Fund XVIII Limited Partnership owns the remaining interest in the
Applebee's restaurant in Slidell, Louisiana.

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

        The  initial  Lease  terms are 20 years  except  for  the
Houston  daycare center, the JEMCARE properties and the  Super  8
Motel  (10  years), the Credit Union (11 years), the  Arby's  (15
years),  and the Waco property discussed below.  Several  of  the
Leases  have renewal options which may extend the Lease  term  an
additional 9 to 15 years.

        The  Partnership acquired lease guarantee insurance  from
United  Guaranty  Commercial Insurance Company of  Iowa  for  the
three  J.T. McCord's, the Houston, Texas daycare center, and  one
of  the  Arlington, Texas daycare centers.  The  policies  insure
approximately 80% of the annual payments for periods of ten years
for  the  daycare centers and a twelve month period  (over  seven
years)  for  the  other  properties.  The rent  guarantee  begins
thirty  days after the occurrence of all the following:  (1)  the
lessee is at least thirty days in default in the payment of rent;
(2)  the  lessee  has  been removed from the  property;  (3)  the
property  has been listed for rent with a real estate broker  and
"For  Rent"  signs  have  been posted on the  property;  and  (4)
certain other minor conditions.  Once these conditions have  been
satisfied, the Partnership will receive lease insurance  payments
until either the property is re-leased or the policy expires.  On
December 15, 1994, the policies on the J.T. McCord's expired.

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


ITEM 2.   PROPERTIES. (Continued)

         For  tax  purposes,  the  Partnership's  properties  are
depreciated  under the Modified Accelerated Cost Recovery  System
(MACRS).  The largest depreciable component of a property is  the
building  which  is depreciated, using the straight-line  method,
over  31.5  years.   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.

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, 1995, there were 1,528  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 purchase 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  and  in  no  event,
obligated  to  purchase Units if such purchase would  impair  the
capital or operation of the Partnership.

        During 1995, twelve Limited Partners redeemed a total  of
118   Partnership  Units  for  $79,774  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using  proceeds  from  the  Applebee's sale,  which  reduced  the
Limited Partners' Adjusted Capital Contribution.  In prior years,
a total of sixty-five Limited Partners redeemed 774.3 Partnership
Units  for  $635,881.   The redemptions  increase  the  remaining
Limited Partners' ownership interest in the Partnership.

       Cash distributions of $10,531 and $10,936 were made to the
General  Partners  and $962,829 and $979,239  were  made  to  the
Limited   Partners   in   1995  and  1994,   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 $643,138  and  $193,255  of
proceeds from property sales in 1995 and 1994, respectively.  The
distributions  reduced  the  Limited Partners'  Adjusted  Capital
Contributions.


ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS.

Results of Operations

       The Partnership's rental income is derived from long-term,
triple net lease agreements on the Partnership's properties.  For
the  years  ended  December 31, 1995 and  1994,  the  Partnership
recognized   rental   income   of  $1,009,008   and   $1,254,459,
respectively.  During  the same periods, the  Partnership  earned
investment income of $77,846 and $10,300, respectively.  In 1995,
rental  income  decreased mainly as the result  of  the  property
sales  discussed  below.   The  decrease  in  rental  income  was
partially  offset by additional investment income earned  on  the
net proceeds from the property sales.

       In May, 1990, Flagship, Inc. (Flagship), the lessee of the
J.T.   McCord's  properties,  filed  for  reorganization,   after
occupying the properties for approximately five years.   Flagship
continued to operate the properties while attempting to develop a
plan   of  reorganization  which  would  be  acceptable  to   the
bankruptcy court and its creditors.  In 1992, it became  apparent
that Flagship did not have the financial resources to operate the
properties  in compliance with the Leases.  In March,  1993,  the
Partnership,  along with affiliated Partnerships which  also  own
J.T.  McCord's  properties, filed its own plan of  reorganization
(the  "Plan") with the Court.  That Plan provided for an assignee
of the Partnerships (a replacement tenant) to purchase the assets
of Flagship and operate the restaurants with financial assistance
from  the  Partnerships.  This Plan was  expected  to  allow  the
Partnerships to avoid closing these properties, allow  operations
to  continue  uninterrupted, and avoid further costly  litigation
with  Flagship and its creditors.  The Plan was confirmed by  the
Court and the creditors April 16, 1993 and became effective  July
20,  1993.  At that time, various claims between Flagship and the
Partnership were dismissed.  On April 21, 1993, the Partnership's
assignee,   WIM,  Inc.  (WIM),  took  over  management   of   the
restaurants.

        To  entice WIM to operate the restaurants and enter  into
the  Lease Agreements, the Partnership provided funds to renovate
the  restaurants and paid for operating expenses.   However,  WIM
was  not able to operate the properties profitably and was unable
to make rental payments as provided in the Lease Agreements.  The
Partnership's  share of renovation and operating expenses  during
this  period  was $755,773.  To reduce expenses and minimize  the
losses  produced  by  these properties, the Waco  restaurant  was
closed  and listed for sale or lease and the Partnership  amended
the  agreements for the Irving and Mesquite locations to  provide
for  WIM to make annual rental payments of the greater of $60,000
or  5.5% of sales beginning October 1, 1994.  In December,  1995,
the  Partnership took possession of the properties after WIM  was
unable  to perform under the terms of the Leases.  The properties
are currently listed for sale or lease.  While the properties are
being  re-leased or sold, the Partnership is responsible for  the
real  estate  taxes  and  other costs required  to  maintain  the
properties.

        As  part  of the Plan, the Partnerships, which own  these
properties,  were  responsible  for  an  annual  payment  to  the
Creditors  Trust  of approximately $110,000  for  the  next  five
years.   The  Partnership's  share  of  the  annual  payment  was
$69,702.   In 1994, the Partnership expensed $302,652  to  record
this   liability   and  administrative  costs  related   to   the
bankruptcy.

       In 1995, the Partnership negotiated a settlement, with the
trustee,  for a lump sum payment of the minimum amount  due  over
the remaining term of the Plan for release of the Partnership and
WIM   from   any   other  financial  obligations  and   reporting
requirements  to  the trustee.  The settlement  of  $215,442  was
completed in the fourth quarter of 1995.


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


        In June 1995, the Partnership re-leased the Waco property
to  Tex-Mex  Cocina  of  Waco, L.C.  The Lease  Agreement  has  a
primary term of eighteen months with an annual rental payment  of
$29,752.  The Partnership could also receive additional  rent  if
gross   receipts  from  the  property  exceed  certain  specified
amounts.  The Lease contains renewal options which may extend the
lease  term an additional 10 years.  The property is now operated
as a Zapata's Cantina & Cafe.

        The  Partnership owns a 30.8078% interest in the  Sizzler
restaurant  in  Cincinnati,  Ohio.   In  November,  1992,   after
reviewing  the  operating results of the lessee, the  Partnership
agreed  to  amend the Lease Agreement of the Sizzler  restaurant.
As of November, 1993, the lessee was in default under the amended
Lease Agreement.  After reviewing the lessee's operating results,
the  Partnership determined that the lessee would  be  unable  to
operate  the  restaurant in a manner capable  of  maximizing  the
restaurant's  sales.   Consequently,  at  the  direction  of  the
Partnership,  a multi-unit restaurant operator assumed  operation
of  this  restaurant while the Partnership reviewed the available
options.  In January, 1994, the Partnership closed the restaurant
and listed it for sale or lease.  While the property is being re-
leased  or  sold,  the Partnership is responsible  for  the  real
estate  taxes and other costs required to maintain the  property.
No  rent was received in 1995 and 1994.  The total amount of rent
not   collected  in  1995  and  1994  was  $64,831  and  $62,943,
respectively.   These  amounts were  not  accrued  for  financial
reporting purposes.

       In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor,   acquired   the  operations   of   the   Fuddruckers
restaurants  in  St.  Louis, Missouri and  Omaha,  Nebraska,  and
assumed the lease obligations from the original lessee.  As  part
of  the  agreement, the Partnership amended the Leases to  reduce
the base rent from the current annual rent of $109,033 to $92,164
for the St. Louis property and $167,699 to $145,081 for the Omaha
property.  The Partnership could receive additional rent  in  the
future  if  10% of gross receipts from the properties exceed  the
base  rent.   In  consideration  for  the  lease  assumption  and
amendment, the Partnership received a lump sum payment  from  the
original  lessee  of  $299,723.  The lump  sum  payment  will  be
recognized as income over the remainder of the Lease terms  which
expire January 31, 2008 and November 30, 2007, using the straight
line  method.   Fuddruckers, Inc. is owned by DAKA International,
which has a net worth in excess of $64 million, making it a  much
higher credit lessee than the original lessee.

        During  the years ended December 31, 1995 and  1994,  the
Partnership   paid   Partnership   administration   expenses   to
affiliated parties of $223,782 and $238,489, 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 $138,202 and $1,204,968, respectively.  These expenses
represent  direct payments to third parties for legal and  filing
fees,  direct administrative costs, outside audit and  accounting
costs,  taxes, insurance and other property costs.  The  decrease
in  these expenses in 1995, when compared to 1994, is the  result
of  expenses  incurred  in  1994 related  to  the  J.T.  McCord's
situation discussed above.

       As of December 31, 1995, the Partnership's annualized cash
distribution  rate  was  6.16%, 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.


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

       Inflation  has  had  a  minimal  effect  on  income   from
operations. It is expected that increases in sales volumes of the
tenants,  due to inflation and real sales growth, will result  in
an  increase  in  rental  income over the  term  of  the  leases.
Inflation  also  may  cause  the  Partnership's  real  estate  to
appreciate  in value. However, inflation and changing prices  may
also  have  an  adverse impact on the operating  margins  of  the
properties' tenants which could impair their ability to pay  rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.

Liquidity and Capital Resources

        During  1995,  the Partnership's cash balances  increased
$991,044   due   to  the  sale  of  three  of  the  Partnership's
properties.  Net cash provided by operating activities  increased
from  $255,982  in 1994 to $543,413 in 1995.  In 1995,  net  cash
income  before depreciation, when compared to 1994, increased  by
approximately   $943,000.   In  1994,  net  cash  income   before
depreciation  was  depressed mainly due  to  property  management
expenses   incurred  related  to  the  J.T.  McCord's   situation
discussed   above.  The  increase  in  net  cash  income   before
depreciation  was partially offset by net timing  differences  in
the  collection of payments from the lessees and the  payment  of
expenses by the Partnership.

         In  1995  and  1994,  net  cash  provided  by  investing
activities  was  $1,440,335  and $2,005,575,  respectively.   The
majority of these amounts represent net proceeds from the sale of
the Partnership's properties.

       In December, 1994, the lessee of the Applebee's restaurant
in  Charleston, South Carolina, exercised an option in the  Lease
Agreement  to purchase the property.  On December 15,  1994,  the
sale  closed with the Partnership receiving net sale proceeds  of
$1,613,288 which resulted in a net gain of $691,525.  At the time
of  sale,  the cost and related accumulated depreciation  of  the
property was $1,126,780 and $205,017, respectively.  A portion of
the  net  sale  proceeds was used to pay off the  bank  note  and
satisfy the mortgage on the property discussed below.

       In March, 1995, the lessee of the Applebee's restaurant in
Columbia,  South  Carolina, exercised  an  option  in  the  Lease
Agreement to purchase the property.  On July 28, 1995,  the  sale
closed  with  the  Partnership receiving  net  sale  proceeds  of
$990,453  which resulted in a net gain of $437,915.  At the  time
of  sale,  the cost and related accumulated depreciation  of  the
property was $723,823 and $171,285, respectively.

       On October 25, 1995, the Partnership sold two of the Jiffy
Lube Auto Care Centers to the lessee.  The Partnership recognized
net  sale proceeds of $322,443, which resulted in a net  gain  of
$80,500  for  the Jiffy Lube in Garland, Texas.  At the  time  of
sale,  the  cost  and  related accumulated  depreciation  of  the
property was $301,884 and $59,941, respectively.  The Partnership
recognized net sale proceeds of $161,218, which resulted in a net
gain of $35,705 for one of the Jiffy Lube's in Dallas, Texas.  At
the  time  of sale, the cost and related accumulated depreciation
of the property was $154,781 and $29,268.

       In July 1995, the Partnership entered into an agreement to
sell  the Super 8 Motel in Hot Springs, Arkansas, to the  lessee.
The  sale  price for the Partnership's interest in  the  property
will  be approximately $680,000, which will result in a net  gain
of   approximately  $220,000.   As  of  December  31,  1995,  the
Partnership  had  received a $20,000 non-refundable  deposit  and
recognized  a  gain of $18,534.  The Partnership anticipates  the
sale will close on March 29, 1996.


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

         In   January,   1996,   the  Cheddar's   restaurant   in
Indianapolis,  Indiana was destroyed by a fire.  The  Partnership
has reached a preliminary agreement with the tenant and insurance
company  which calls for termination of the Lease, demolition  of
the  building  and  payment to the Partnership  of  approximately
$428,000 for the building and equipment and approximately $50,000
for  lost  rent.   The  property will  not  be  rebuilt  and  the
Partnership will list the land for sale.  The Partnership's  cost
and   related  accumulated  depreciation  in  the  building   and
equipment  at  December  31,  1995  was  $496,967  and  $177,343,
respectively.   The settlement would result  in  a  net  gain  of
approximately $108,376.  The Partnership's cost of  the  land  is
$253,747.

         During  1995  and  the  fourth  quarter  of  1994,   the
Partnership  distributed $730,214 and $299,667, respectively,  of
the net sale proceeds to the Limited and General Partners as part
of  their  regular quarterly distributions and  to  pay  for  the
redemption of Partnership Units.  The distributions represented a
return  of  capital of $50.98 and $20.85 per Limited  Partnership
Unit,  respectively.  The majority of the remaining net  proceeds
will be reinvested in additional properties.

        In  November,  1995,  the  Partnership  entered  into  an
Agreement  to  purchase  an Applebee's  restaurant  in  Victoria,
Texas.  The purchase price will be approximately $1,314,000.  The
property  will  be  leased to Renaissant Development  Corporation
under  a  Lease  Agreement with a primary term of  20  years  and
annual rental payments of approximately $151,000.

       The Partnership's primary use of cash flow is distribution
and  redemption  payments to Partners.  The Partnership  declares
its  regular  quarterly  distributions before  the  end  of  each
quarter and pays the distribution in the first week after the end
of  each quarter.  The Partnership attempts to maintain a  stable
distribution  rate from quarter to quarter.  Redemption  payments
are  paid  to  redeeming Partners in the fourth quarter  of  each
year.   The  redemption payments generally are funded  with  cash
that  would  normally  be paid as part of the  regular  quarterly
distributions.    As   a   result,   total   distributions    and
distributions payable have fluctuated from year to  year  due  to
cash  used  to  fund redemption payments.  This  is  one  of  the
reasons  why distributions to Partners were higher in  1994  when
compared to 1995.

        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  and  in  no  event,
obligated  to  purchase Units if such purchase would  impair  the
capital or operation of the Partnership.

        During 1995, twelve Limited Partners redeemed a total  of
118   Partnership  Units  for  $79,774  in  accordance  with  the
Partnership  Agreement.   The Partnership  acquired  these  Units
using  proceeds  from  the  Applebee's sale,  which  reduced  the
Limited Partners' Adjusted Capital Contribution.  In prior years,
a total of sixty-five Limited Partners redeemed 774.3 Partnership
Units  for  $635,881.   The redemptions  increase  the  remaining
Limited Partners' ownership interest in the Partnership.


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

        On January 31, 1994, the Partnership entered into a five-
year  bank term Note for $570,287 with interest at the prime rate
plus  one half percent.  Proceeds from the Note were advanced  to
WIM  for refurbishing and other restaurant costs related  to  the
J.T.  McCord's properties.  The Partnership provided  a  mortgage
and a Lease Assignment Agreement on its Applebee's restaurant  in
Charleston,  South  Carolina  as collateral  for  the  loan.   On
December  15,  1994,  the Partnership sold  the  property  and  a
portion  of  the net proceeds was used to pay off the outstanding
principal balance of the bank Note and satisfy the mortgage.   In
1994, interest expense on the Note was $34,749.

        In November, 1993, the Partnership established a $350,000
unsecured  line  of credit at Fidelity Bank of Edina,  Minnesota.
The  line  of  credit bears interest at the prime rate  plus  one
percent on the outstanding balance, which was due on demand,  but
in  any event no later than November 1, 1994.  The line of credit
was  established  to provide short-term financing  to  cover  any
temporary  cash deficits.  In December, 1994, the line of  credit
was  cancelled.   For the year ended December 31, 1994,  interest
expense related to the line of credit was $6,985.

      The  continuing rent payments from the properties, together
with  cash generated from the property sales, should be  adequate
to  fund  continuing  distributions and  meet  other  Partnership
obligations on both a short-term and long-term basis.

ITEM 7.   FINANCIAL STATEMENTS.

       See accompanying Index to Financial Statements.
                                
                                
                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP

                  INDEX TO FINANCIAL STATEMENTS




                                                       

Independent Auditor's Report                            

Balance Sheet as of December 31, 1995 and 1994          

Statements for the Years Ended December 31, 1995 and 1994:

     Income                                             

     Cash Flows                                         

     Changes in Partners' Capital                       

Notes to Financial Statements                      

                                
                                
                                
                  INDEPENDENT AUDITOR'S REPORT



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, 1995 and 1994 and  the  related
statements of income, cash flows and changes in partners' capital
for  the  years then ended.  These financial statements  are  the
responsibility    of   the   Partnership's    management.     Our
responsibility  is  to  express an  opinion  on  these  financial
statements based on our audits.

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

      In  our opinion, the financial statements referred to above
present  fairly, in all material respects, the financial position
of  AEI  Real Estate Fund XVI Limited Partnership as of  December
31, 1995 and 1994, and the results of its operations and its cash
flows  for  the  years then ended, in conformity  with  generally
accepted accounting principles.




Minneapolis,  Minnesota        /s/ Boulay, Heutmaker, Zibell &Co. P.L.L.P.
February 6, 1996               Certified Public Accountants




<PAGE>
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                          BALANCE SHEET
                                
                           DECEMBER 31
                                
                             ASSETS
                                
                                                    1995           1994
 
CURRENT ASSETS:
  Cash                                          $ 1,873,834    $   882,790
  Receivables                                        54,661         65,157
                                                 -----------    -----------
      Total Current Assets                        1,928,495        947,947
                                                 -----------    -----------
INVESTMENTS IN REAL ESTATE:
  Land                                            3,537,198      3,873,470
  Buildings and Equipment                         6,966,837      7,811,053
  Property Acquisition Costs                         14,813              0
  Accumulated Depreciation                       (2,274,424)    (2,217,859)
                                                 -----------    -----------
      Net Investments in Real Estate              8,244,424      9,466,664
                                                 -----------    -----------
          Total Assets                          $10,172,919    $10,414,611
                                                 ===========    ===========

                     LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Payable  to  AEI Fund Management, Inc.        $   153,644    $   111,970
  Distributions Payable                             190,172        129,742
  Current Portion of Contract Payable                     0         38,698
  Deferred Income                                    22,212         21,012
                                                 -----------    -----------
      Total Current Liabilities                     366,028        301,422
                                                 -----------    -----------

CONTRACT PAYABLE - Net of Current Portion                 0        197,504

DEFERRED INCOME  - Net of Current Portion           244,193        267,605

PARTNERS' CAPITAL (DEFICIT):
  General Partners                                  (33,570)       (32,717)
  Limited Partners, $1,000 Unit value;
   15,000 Units authorized and issued;
   14,108 and 14,226 outstanding in
   1995 and 1994, respectively                    9,596,268      9,680,797
                                                 -----------    -----------
     Total Partners' Capital                      9,562,698      9,648,080
                                                 -----------    -----------
       Total Liabilities and Partners' Capital  $10,172,919    $10,414,611
                                                 ===========    ===========
                                
 The accompanying notes to financial statements are an integral
                     part of this statement.


<PAGE>

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                       STATEMENT OF INCOME
                                
                 FOR THE YEARS ENDED DECEMBER 3l


                                                  1995            1994
  
INCOME:
  Rent                                        $ 1,009,008     $ 1,254,459
  Investment Income                                77,846          10,300
                                               -----------     -----------
      Total Income                              1,086,854       1,264,759
                                               -----------     -----------

EXPENSES:
  Partnership Administration - Affiliates         223,782         238,489
  Partnership Administration and Property
     Management - Unrelated Parties               138,202       1,204,968
     Interest                                      12,713          52,099
  Depreciation                                    317,059         356,529
                                               -----------     -----------
      Total Expenses                              691,756       1,852,085
                                               -----------     -----------

OPERATING INCOME (LOSS)                           395,098        (587,326)

GAIN ON SALE OF REAL ESTATE                       572,654         691,525
                                               -----------     -----------

NET INCOME                                    $   967,752     $   104,199
                                               ===========     ===========

NET INCOME ALLOCATED:
  General Partners                            $     9,678     $     1,042
  Limited Partners                                958,074         103,157
                                               -----------     -----------
                                              $   967,752     $   104,199
                                               ===========     ===========

NET INCOME PER LIMITED PARTNERSHIP UNIT
(14,196 and 14,330 weighted average Units
outstanding in 1995 and 1994, respectively)   $    67.49      $     7.20
                                               ===========     ===========



 The accompanying notes to financial statements are an integral
                     part of this statement.



<PAGE>
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                     STATEMENT OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31
                               
                                                      1995           1994

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income                                     $   967,752     $   104,199

  Adjustments To Reconcile Net Income
  To Net Cash Provided By Operating Activities:
     Depreciation                                    317,059         356,529
     Gain on Sale of Real Estate                    (572,654)       (691,525)
     Decrease in Receivables                          47,996          16,754
     Increase (Decrease) in Payable to
     AEI Fund Management, Inc.                        41,674         (37,794)
     Increase (Decrease) in Contract Payable        (236,202)        236,202
     Decrease in Security Deposit                          0         (15,361)
     Increase (Decrease) in Deferred Income          (22,212)        286,978
                                                  -----------     -----------
       Total Adjustments                            (424,339)        151,783
                                                  -----------     -----------
       Net Cash Provided By
          Operating Activities                       543,413         255,982
                                                  -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments in Real Estate                         (14,813)              0
  Proceeds from Sale of Real Estate                1,455,148       1,613,288
  Decrease in Long-Term Receivable                         0         392,287
                                                  -----------     -----------
       Net Cash Provided By
           Investing Activities                    1,440,335       2,005,575
                                                  -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (Decrease) in Distributions Payable        60,430         (74,386)
  Distributions to Partners                         (972,554)       (989,130)
  Redemption Payments                                (80,580)       (104,461)
  Decrease in Line of Credit                               0        (263,000)
                                                  -----------     -----------
       Net Cash Used For
         Financing Activities                       (992,704)     (1,430,977)
                                                  -----------     -----------
NET INCREASE IN CASH                                 991,044         830,580

CASH, beginning of period                            882,790          52,210
                                                  -----------     -----------
CASH, end of period                              $ 1,873,834     $   882,790
                                                  ===========     ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest Paid During the Year                  $    17,157     $    47,655
                                                  ===========     ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:

  Note Receivable Acquired in Sale of Property   $    37,500

                                                  ===========
 The accompanying notes to financial statements are an integral
                     part of this statement.
<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, 1993  $ (22,823)   $10,660,295  $10,637,472  14,364.70

  Distributions                (9,891 )     (979,239)    (989,130)

  Redemption Payments          (1,045)      (103,416)    (104,461)   (139.00)

  Net Income                    1,042        103,157      104,199
                             ----------   -----------  ----------  ----------
BALANCE, December 31, 1994    (32,717)     9,680,797    9,648,080  14,225.70

  Distributions                (9,725)      (962,829)    (972,554)

  Redemption Payments            (806)       (79,774)     (80,580)   (118.00)

  Net Income                    9,678        958,074      967,752
                             ----------   -----------  ----------  ----------
BALANCE, December 31, 1995  $ (33,570)   $ 9,596,268  $ 9,562,698  14,107.70
                             ==========   ===========  ==========  ==========





 The accompanying notes to financial statements are an integral
                     part of this statement.
</PAGE>


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHlP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1995 and 1994
                                
(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   of  the  Partnership.   Robert  P.  Johnson,   the
     President  and  sole  shareholder  of  AFM,  serves  as  the
     Individual General Partner of the Partnership.  An affiliate
     of  AFM,  AEI  Fund  Management, Inc.  (AEI),  performs  the
     administrative and operating functions for the Partnership.
     
     The   terms   of  the  Partnership  offering  call   for   a
     subscription  price of $1,000 per Limited Partnership  Unit,
     payable   on  acceptance  of  the  offer.   The  Partnership
     commenced  operations  on  February  6,  1987  when  minimum
     subscriptions    of   2,000   Limited   Partnership    Units
     ($2,000,000)  were  accepted.   The  Partnership's  offering
     terminated on November 6, 1987 when the maximum subscription
     limit of 15,000 Limited Partnership Units ($15,000,000)  was
     reached.
     
     Under  the  terms of the Limited Partnership Agreement,  the
     Limited  Partners and General Partners contributed funds  of
     $15,000,000 and $1,000, respectively.  During the  operation
     of the Partnership, any Net Cash Flow, as defined, which the
     General Partners determine to distribute will be distributed
     90% to the Limited Partners and 10% to the General Partners;
     provided,  however, that such distributions to  the  General
     Partners will be subordinated to the Limited Partners  first
     receiving an annual, noncumulative distribution of Net  Cash
     Flow equal to 10% of their Adjusted Capital Contribution, as
     defined,  and, provided further, that in no event  will  the
     General Partners receive less than 1% of such Net Cash  Flow
     per  annum. Distributions to Limited Partners will  be  made
     pro rata by Units.
     
     Any  Net  Proceeds  of Sale, as defined, from  the  sale  or
     financing of the Partnership's properties which the  General
     Partners determine to distribute will, after provisions  for
     debts  and  reserves, be paid in the following manner:   (i)
     first,  99%  to the Limited Partners and 1% to  the  General
     Partners until the Limited Partners receive an amount  equal
     to:  (a)  their Adjusted Capital Contribution  plus  (b)  an
     amount  equal  to 6% of their Adjusted Capital  Contribution
     per  annum, cumulative but not compounded, to the extent not
     previously distributed from Net Cash Flow; (ii) next, 99% to
     the  Limited  Partners and 1% to the General Partners  until
     the Limited Partners receive an amount equal to 14% of their
     Adjusted Capital Contribution per annum, cumulative but  not
     compounded, to the extent not previously distributed;  (iii)
     next, to the General Partners until cumulative distributions
     to the General Partners under Items (ii) and (iii) equal 15%
     of cumulative distributions to all Partners under Items (ii)
     and (iii).  Any remaining balance will be distributed 85% to
     the  Limited  Partners  and  15% to  the  General  Partners.
     Distributions to the Limited Partners will be made pro  rata
     by Units.


          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHlP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1995 and 1994
                                
(1)  Organization - (Continued)

     For  tax  purposes,  profits  from  operations,  other  than
     profits  attributable  to  the  sale,  exchange,  financing,
     refinancing   or  other  disposition  of  the  Partnership's
     property,  will  be  allocated first in the  same  ratio  in
     which,  and  to the extent, Net Cash Flow is distributed  to
     the Partners for such year.  Any additional profits will  be
     allocated 90% to the Limited Partners and 10% to the General
     Partners.  In  the event no Net Cash Flow is distributed  to
     the  Limited  Partners,  90% of  each  item  of  Partnership
     income,  gain  or credit for each respective year  shall  be
     allocated to the Limited Partners, and 10% of each such item
     shall be allocated to the General Partners.  Net losses from
     operations will be allocated 98% to the Limited Partners and
     2% to the General Partners.
     
     For  tax purposes, profits arising from the sale, financing,
     or  other disposition of the Partnership's property will  be
     allocated  in  accordance with the Partnership Agreement  as
     follows:  (i) first, to those partners with deficit balances
     in  their capital accounts in an amount equal to the sum  of
     such  deficit  balances; (ii) second,  99%  to  the  Limited
     Partners  and 1% to the General Partners until the aggregate
     balance in the Limited Partners' capital accounts equals the
     sum  of the Limited Partners' Adjusted Capital Contributions
     plus  an  amount  equal  to 14% of  their  Adjusted  Capital
     Contributions  per annum, cumulative but not compounded,  to
     the  extent  not previously allocated; (iii) third,  to  the
     General Partners until cumulative allocations to the General
     Partners equal 15% of cumulative allocations.  Any remaining
     balance  will  be allocated 85% to the Limited Partners  and
     15%  to the General Partners.  Losses will be allocated  98%
     to the Limited Partners and 2% to the General Partners.
     
     The  General Partners are not required to currently  fund  a
     deficit   capital   balance.   Upon   liquidation   of   the
     Partnership or withdrawal by a General Partner, the  General
     Partners will contribute to the Partnership an amount  equal
     to  the  lesser  of  the deficit balances in  their  capital
     accounts  or  1%  of  total Limited  Partners'  and  General
     Partners' capital contributions.
         
(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 PARTNERSHlP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1995 and 1994

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

       Given that the Partnership has had limited success in  its
       efforts to lease or dispose of certain properties,  it  is
       reasonably  possible that the Partnership's estimate  that
       it  will  recover the carrying amount of these  properties
       from  future operations or sales will change in  the  near
       term.
       
     Cash Concentrations of Credit Risk

       At  times  throughout  the year,  the  Partnership's  cash
       deposited  in  financial  institutions  may  exceed   FDIC
       insurance limits.
     
     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  long-term
       triple  net  leases classified as operating  leases.   The
       Partnership  recognizes  rental  revenue  on  the  accrual
       basis  according  to  the terms of the individual  leases.
       For  leases  which contain cost of living  increases,  the
       increases  are  recognized in the year in which  they  are
       effective.
       
       Real  estate is recorded at the lower of cost or estimated
       net  realizable value.  The Financial Accounting Standards
       Board  has issued Statement No. 121, "Accounting  for  the
       Impairment of Long-Lived Assets and for Long-Lived  Assets
       to   be   Disposed   Of"  which  is  effective   for   the
       Partnership's  fiscal year ended December 31,  1996.   The
       Partnership  regularly reviews the carrying value  of  its
       properties  and  will  reduce  properties  to  their   net
       realizable value as needed.  Adoption of Statement 121  is
       not   expected   to  have  a  material   effect   on   the
       Partnership's operations.
       
       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.

                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHlP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1995 and 1994


(3)  Related Party Transactions -

     In  1987,  the Partnership acquired an 83.6514% interest  in
     the  Children's  World Daycare Center  located  in  Sterling
     Heights,  Michigan.  The remaining interest is owned  by  an
     affiliate  of  the  Partnership, AEI Real Estate  Fund  85-B
     Limited Partnership.
     
     In  1987  and  1988,  the Partnership  acquired  a  55.0958%
     interest in the restaurant in Waco, Texas, a 40% interest in
     the St. Louis Fuddruckers restaurant and a 50% interest in a
     Super  8  Motel. The remaining interests in these properties
     are  owned  by  an  affiliate of the Partnership,  AEI  Real
     Estate Fund XV Limited Partnership.
     
     In  1988,  the  Partnership purchased a 50%  interest  in  a
     Cheddar's  restaurant and a 58.12% interest in the  Columbia
     Applebee's  restaurant.  The remaining  interests  in  these
     properties are owned by an affiliate of the Partnership, AEI
     Real Estate Fund XVII Limited Partnership.
     
     In  February and March, 1988, the Partnership sold,  at  its
     original  cost  of $2,101,052, a majority interest  in  four
     properties  to  an affiliated partnership, AEI  Real  Estate
     Fund  XVII Limited Partnership.  The Partnership sold a  65%
     interest  in  the Mesquite J.T. McCord's restaurant,  a  50%
     interest  in  the  Jiffy Lube in Garland, Texas  and  a  75%
     interest  in both of the Jiffy Lubes in Dallas, Texas.   The
     Partnership  recognized a $9,272 gain on  the  sale  of  the
     interests  in the properties, which represents recapture  of
     the  accumulated depreciation on the property  interests  at
     the  time of sale.  The sale of these interests allowed  the
     Partnership  to  acquire  all  of  its  commitments  without
     financing  and  provided  a greater diversification  of  its
     property portfolio.
     
     In  1990, the Partnership acquired a 30.8078% interest in  a
     Sizzler restaurant.  The remaining interest in this property
     is  owned  by  AEI Real Estate Funds XVII and XVIII  Limited
     Partnerships, affiliates of the Partnership.
     
     In  May, 1993, the Partnership acquired a 73% interest in an
     Applebee's restaurant in Slidell, Louisiana.  The  remaining
     interest  in this property is owned by AEI Real Estate  Fund
     XVIII Limited Partnership.
     
     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 PARTNERSHlP

                  NOTES TO FINANCIAL STATEMENTS

                   DECEMBER 31, 1995 and 1994

                                
(3)  Related Party Transactions -(Continued)

     AFM   and  AEI  received  the  following  compensation   and
     reimbursements for costs and expenses from the Partnership:
     
                                      Total Incurred by the Partnership
                                       for the Years Ended December 3l

                                                       1995          1994
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.                                           $ 223,782    $ 238,489
                                                        ========     ========

b. AEI and AFM are reimbursed for all direct
   expenses they have paid on the Partnership's
   behalf to third parties.  These expenses
   included printing costs, legal and filing fees,
   direct administrative costs, outside audit and
   accounting costs, taxes, insurance and
   other property costs.  In 1994, this amount
   includes $1,058,425 of property operating
   and renovation costs related to the J.T. McCord's
   properties as discussed in Note 4.                  $ 138,202    $1,204,968
                                                        ========     =========

c. AEI is reimbursed for all property acquisition
   costs incurred by it in acquiring properties on
   behalf of the Partnership.  The amounts are net
   of financing and commitment fees and expense
   reimbursements received by the Partnership from
   the lessees in the amount of $6,250 for 1995.       $  14,813    $       0
                                                        ========     ========

     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, 1995 and 1994

                                
(4)  Investments in Real Estate -
     
     The  Partnership  leases its properties to  various  tenants
     through   non-cancelable  triple  net  leases,   which   are
     classified  as operating leases.  Under a triple net  lease,
     the  lessee  is  responsible  for  all  real  estate  taxes,
     insurance,  maintenance, repairs and operating  expenses  of
     the  property.  The initial Lease terms are 20 years  except
     for  the Houston daycare center, the JEMCARE properties  and
     the  Super 8 Motel (10 years), the Credit Union (11  years),
     the  Arby's  (15  years),  and the Waco  property  discussed
     below.  Several of the Leases have renewal options which may
     extend  the  Lease term an additional 9 to  15  years.   The
     Leases contain rent clauses which entitle the Partnership to
     receive additional rent in future years based on stated rent
     increases  or  if  gross receipts for  the  property  exceed
     certain  specified amounts, among other conditions.  Certain
     lessees  have been granted options to purchase the property.
     Depending  on  the  lease,  the  purchase  price  is  either
     determined  by  a  formula, or is the greater  of  the  fair
     market value of the property or the amount determined  by  a
     formula.   In all cases, if the option were to be  exercised
     by  the lessee, the purchase price would be greater than the
     original cost of the property.
     
     The  Partnership's  properties are all  commercial,  single-
     tenant  buildings.   The  restaurant  in  Waco,  Texas   was
     constructed  in  1980 and enlarged in 1982  and  1983.   The
     Irving  and  Mesquite  J.T.  McCord's  restaurants  and  the
     Houston daycare center were constructed in 1984.  The  Omaha
     Fuddruckers restaurant was constructed in 1985 and remodeled
     in  1987.   The Sizzler restaurant was constructed in  1989.
     The   Applebee's  restaurant  in  Slidell,  Louisiana,   was
     constructed  in 1993.  All other properties were constructed
     in 1986, 1987 or 1988.  All properties were acquired in 1987
     or  1988,  except  for  the  Sizzler  restaurant  which  was
     acquired  in 1990, and the Slidell Applebee's restaurant  in
     1993.   There have been no costs capitalized as improvements
     subsequent to the acquisitions.

                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994

                                
(4)  Investments in Real Estate - (Continued)
     
     The cost of the properties and the related accumulated
     depreciation at December 31, 1995 are as follows:

                                       Buildings and              Accumulated
Property                       Land      Equipment       Total    Depreciation

Daycare Center
  Houston, TX              $  147,753    $ 335,375   $   483,128   $  121,003
Credit Union, Wyoming, MI     166,434      459,805       626,239      167,369
Arby's, Grand Rapids, MI      195,229      457,651       652,880      166,585
Fuddruckers, Omaha, NE        307,913      843,630     1,151,543      369,765
Children's World,
  Sterling Heights, MI        138,133      591,353       729,486      178,909
Jiffy Lube, Dallas, TX         65,918       88,973       154,891       30,171
JEMCARE, Arlington, TX        148,214      302,261       450,475       89,593
Zapata's, Waco, TX            226,315      447,970       674,285      151,302
J.T. McCord's, Irving, TX     441,252      706,081     1,147,333      238,479
J.T. McCord's, Mesquite, TX   230,337      289,772       520,109       97,861
JEMCARE, Arlington, TX        323,671      279,970       603,641       98,524
Cheddar's, Indianapolis, IN   253,747      496,967       750,714      177,343
Fuddruckers, St. Louis, MO    396,943      364,110       761,053      127,208
Super 8, Hot Springs, AR      105,417      478,236       583,653      131,056
Sizzler, Cincinnati, OH       111,043      357,097       468,140       87,693
Applebee's, Slidell, LA       278,879      467,586       746,465       41,563
                           -----------  ------------  -----------  -----------
                          $ 3,537,198  $ 6,966,837   $10,504,035  $ 2,274,424
                           ===========  ============  ===========  ===========
     


     In  May, 1990, Flagship, Inc. (Flagship), the lessee of  the
     J.T.  McCord's  properties, filed for reorganization,  after
     occupying  the  properties  for  approximately  five  years.
     Flagship   continued   to  operate  the   properties   while
     attempting  to develop a plan of reorganization which  would
     be acceptable to the bankruptcy court and its creditors.  In
     1992,  it  became apparent that Flagship did  not  have  the
     financial  resources to operate the properties in compliance
     with  the  leases.   In March, 1993, the Partnership,  along
     with  affiliated Partnerships which also own  J.T.  McCord's
     properties,  filed  its  own  plan  of  reorganization  (the
     "Plan")  with the Court.  That Plan provided for an assignee
     of  the Partnerships (a replacement tenant) to purchase  the
     assets   of  Flagship  and  operate  the  restaurants   with
     financial assistance from the Partnerships.  This  Plan  was
     expected  to  allow the Partnerships to avoid closing  these
     properties, allow operations to continue uninterrupted,  and
     avoid  further  costly  litigation  with  Flagship  and  its
     creditors.   The  Plan was confirmed by the  Court  and  the
     creditors April 16, 1993 and became effective July 20, 1993.
     At  that  time,  various  claims between  Flagship  and  the
     Partnership  were  dismissed.   On  April  21,   1993,   the
     Partnership's   assignee,  WIM,  Inc.   (WIM),   took   over
     management of the restaurants.
     
                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994

                                
(4)  Investments in Real Estate - (Continued)
     
     To  entice WIM to operate the restaurants and enter into the
     Lease Agreements, the Partnership provided funds to renovate
     the  restaurants and paid for operating expenses.   However,
     WIM  was  not able to operate the properties profitably  and
     was  unable to make rental payments as provided in the Lease
     Agreements.   The  Partnership's  share  of  renovation  and
     operating expenses during this period was $755,773 which was
     included   in   Partnership  Administration   and   Property
     Management  -  Unrelated Parties.  To  reduce  expenses  and
     minimize  the losses produced by these properties, the  Waco
     restaurant was closed and listed for sale or lease  and  the
     Partnership  amended  the  agreements  for  the  Irving  and
     Mesquite locations to provide for WIM to make annual  rental
     payments  of  the  greater  of  $60,000  or  5.5%  of  sales
     beginning   October  1,  1994.   In  December,   1995,   the
     Partnership took possession of the properties after WIM  was
     unable  to  perform  under the terms  of  the  Leases.   The
     properties  are currently listed for sale or  lease.   While
     the  properties are being re-leased or sold, the Partnership
     is  responsible  for the real estate taxes and  other  costs
     required to maintain the properties.
     
     As  part  of  the  Plan, the Partnerships, which  own  these
     properties,  were responsible for an annual payment  to  the
     Creditors Trust of approximately $110,000 for the next  five
     years.   The  Partnership's share of the annual payment  was
     $69,702.   In  1994,  the Partnership expensed  $302,652  to
     record  this liability and administrative costs  related  to
     the bankruptcy.
     
     In  1995, the Partnership negotiated a settlement, with  the
     trustee,  for a lump sum payment of the minimum  amount  due
     over  the  remaining  term of the Plan for  release  of  the
     Partnership and WIM from any other financial obligations and
     reporting  requirements to the trustee.  The  settlement  of
     $215,442 was completed in the fourth quarter of 1995.
     
     In June 1995, the Partnership re-leased the Waco property to
     Tex-Mex  Cocina  of Waco, L.C.  The Lease  Agreement  has  a
     primary  term  of  eighteen months  with  an  annual  rental
     payment  of  $29,752.  The Partnership  could  also  receive
     additional  rent if gross receipts from the property  exceed
     certain  specified  amounts.   The  Lease  contains  renewal
     options  which  may extend the lease term an  additional  10
     years.  The property is now operated as a Zapata's Cantina &
     Cafe.
     
     In  December, 1994, the lessee of the Applebee's  restaurant
     in  Charleston, South Carolina, exercised an option  in  the
     Lease  Agreement to purchase the property.  On December  15,
     1994,  the  sale closed with the Partnership  receiving  net
     sale proceeds of $1,613,288 which resulted in a net gain  of
     $691,525.   At  the  time  of sale,  the  cost  and  related
     accumulated depreciation of the property was $1,126,780  and
     $205,017, respectively.  A portion of the net sale  proceeds
     was  used  to pay off the bank note and satisfy the mortgage
     on the property discussed in Note 7.
     
                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994


(4)  Investments in Real Estate - (Continued)

     In  March, 1995, the lessee of the Applebee's restaurant  in
     Columbia,  South Carolina, exercised an option in the  Lease
     Agreement  to purchase the property.  On July 28, 1995,  the
     sale closed with the Partnership receiving net sale proceeds
     of  $990,453  which resulted in a net gain of $437,915.   At
     the   time   of  sale,  the  cost  and  related  accumulated
     depreciation  of  the  property was $723,823  and  $171,285,
     respectively.
     
     On  October 25, 1995, the Partnership sold two of the  Jiffy
     Lube  Auto  Care  Centers  to the lessee.   The  Partnership
     recognized net sale proceeds of $322,443, which resulted  in
     a  net gain of $80,500 for the Jiffy Lube in Garland, Texas.
     At  the  time  of  sale,  the cost and  related  accumulated
     depreciation  of  the  property was  $301,884  and  $59,941,
     respectively.  The Partnership recognized net sale  proceeds
     of $161,218, which resulted in a net gain of $35,705 for one
     of  the Jiffy Lube's in Dallas, Texas.  At the time of sale,
     the   cost  and  related  accumulated  depreciation  of  the
     property was $154,781 and $29,268.
     
     In  July 1995, the Partnership entered into an agreement  to
     sell  the  Super  8 Motel in Hot Springs, Arkansas,  to  the
     lessee.   The  sale price for the Partnership's interest  in
     the  property  will  be approximately $680,000,  which  will
     result  in  a  net  gain of approximately $220,000.   As  of
     December  31, 1995, the Partnership had received  a  $20,000
     non-refundable earnest money deposit and recognized  a  gain
     of $18,534.  The Partnership anticipates the sale will close
     on March 29, 1996.
     
     In  January, 1996, the Cheddar's restaurant in Indianapolis,
     Indiana  was  destroyed  by  a fire.   The  Partnership  has
     reached   a  preliminary  agreement  with  the  tenant   and
     insurance company which calls for termination of the  Lease,
     demolition of the building and payment to the Partnership of
     approximately  $428,000 for the building and  equipment  and
     approximately $50,000 for lost rent.  The property will  not
     be  rebuilt and the Partnership will list the land for sale.
     The  Partnership's cost and related accumulated depreciation
     in  the  building  and equipment at December  31,  1995  was
     $496,967 and $177,343, respectively.  The settlement will be
     in  excess  of  the  net  book value  of  the  building  and
     equipment at December 31, 1995.  The Partnership's  cost  of
     the land is $253,747.
     
     During  1995 and the fourth quarter of 1994, the Partnership
     distributed $730,214 and $299,667, respectively, of the  net
     sale proceeds to the Limited and General Partners as part of
     their  regular quarterly distributions and to  pay  for  the
     redemption   of   Partnership  Units.    The   distributions
     represented  a  return of capital of $50.98 and  $20.85  per
     Limited Partnership Unit, respectively.  The majority of the
     remaining  net  proceeds  will be reinvested  in  additional
     properties.
     
     In November, 1995, the Partnership entered into an Agreement
     to  purchase  an  Applebee's restaurant in Victoria,  Texas.
     The  purchase  price will be approximately $1,314,000.   The
     property   will   be   leased  to   Renaissant   Development
     Corporation under a Lease Agreement with a primary  term  of
     20   years  and  annual  rental  payments  of  approximately
     $151,000.  The Partnership has incurred net costs of $14,813
     related to the acquisition of the property.  The costs  have
     been capitalized and will be allocated to land, building and
     equipment.
     
                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994
                                
(4)  Investments in Real Estate - (Continued)
     
     The  Partnership  owns a 30.8078% interest  in  the  Sizzler
     restaurant  in Cincinnati, Ohio.  In November,  1992,  after
     reviewing   the  operating  results  of  the   lessee,   the
     Partnership  agreed  to  amend the Lease  Agreement  of  the
     Sizzler restaurant.  As of November, 1993, the lessee was in
     default  under the amended Lease Agreement.  After reviewing
     the  lessee's operating results, the Partnership  determined
     that the lessee would be unable to operate the restaurant in
     a  manner  capable  of  maximizing the  restaurant's  sales.
     Consequently, at the direction of the Partnership, a  multi-
     unit   restaurant   operator  assumed  operation   of   this
     restaurant  while  the  Partnership reviewed  the  available
     options.   In  January,  1994, the  Partnership  closed  the
     restaurant  and  listed it for sale  or  lease.   While  the
     property  is  being  re-leased or sold, the  Partnership  is
     responsible  for  the  real estate  taxes  and  other  costs
     required to maintain the property.  No rent was received  in
     1995  and  1994.  The total amount of rent not collected  in
     1995  and 1994 was $64,831 and $62,943, respectively.  These
     amounts were not accrued for financial reporting purposes.
     
     The  minimum future rentals on the non-cancelable Leases for
     years subsequent to December 31, 1995 are as follows:
     
                       1996            $ 924,261
                       1997              879,750
                       1998              814,890
                       1999              788,336
                       2000              752,143
                       Thereafter      5,509,836
                                       ---------
                                      $9,669,216
                                       =========

     The Partnership recognized contingent rents in 1995 and 1994
     of $19,971 and $58,578, respectively.
     
(5)  Line of Credit -
     
     In  November, 1993, the Partnership established  a  $350,000
     unsecured  line  of  credit  at  Fidelity  Bank  of   Edina,
     Minnesota.  The line of credit bears interest at  the  prime
     rate plus one percent on the outstanding balance, which  was
     due  on  demand, but in any event no later than November  1,
     1994.   The line of credit was established to provide short-
     term  financing  to cover any temporary cash  deficits.   In
     December, 1994, the line of credit was cancelled.   For  the
     year  ended  December 31, 1994, interest expense related  to
     the line of credit was $6,985.

                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994


(6)  Deferred Income -

     In  June,  1994, Fuddruckers, Inc., the restaurant concept's
     franchisor,  acquired  the  operations  of  the  Fuddruckers
     restaurants in St. Louis, Missouri and Omaha, Nebraska,  and
     assumed the lease obligations from the original lessee.   As
     part of the agreement, the Partnership amended the Leases to
     reduce  the  base  rent  from the  current  annual  rent  of
     $109,033  to $92,164 for the St. Louis property and $167,699
     to  $145,081 for the Omaha property.  The Partnership  could
     receive  additional  rent in the  future  if  10%  of  gross
     receipts  from  the  properties exceed the  base  rent.   In
     consideration  for the lease assumption and  amendment,  the
     Partnership  received a lump sum payment from  the  original
     lessee of $299,723.  The lump sum payment will be recognized
     as income over the remainder of the Lease terms which expire
     January  31, 2008 and November 30, 2007, using the  straight
     line  method.   As  of  December  31,  1995  and  1994,  the
     Partnership recognized $33,318 and $11,106, respectively, of
     this payment as income.

(7)  Long-Term Debt -
     
     On  January 31, 1994, the Partnership entered into  a  five-
     year  bank term Note for $570,287 with interest at the prime
     rate  plus  one half percent.  Proceeds from the  Note  were
     advanced  to  WIM for renovation and other restaurant  costs
     related  to  the J.T. McCord's properties.  The  Partnership
     provided a mortgage and a Lease Assignment Agreement on  the
     Applebee's restaurant located in Charleston, South  Carolina
     as collateral for the loan.  On December 15, 1994, a portion
     of the net proceeds from the sale of the Applebee's property
     was used to pay off the outstanding principal balance of the
     bank  Note  and  satisfy the mortgage.   In  1994,  interest
     expense on the Note was $34,749.
     
     

                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994


(8)  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:
     
     Tenants who individually generate
     10% or more of total rent revenue:
                                                      1995        1994
      Tenants                       Industry
 
     Fuddruckers, Inc.              Restaurant      $ 259,457   $ 267,856
     Southland Restaurant
       Development Company, L.L.C.  Restaurant        102,424         N/A
     Apple South, Inc.              Restaurant            N/A     288,204
                                                     --------    --------

     Aggregate rent revenue of major tenants       $  361,881   $ 556,060
                                                     ========    ========

     Aggregate rent revenue of major tenants as
     a percentage of total rent revenue                   36%         44%
                                                     ========    ========

(9) Partners' Capital -

     Cash  distributions of $10,531 and $10,936 were made to  the
     General Partners and $962,829 and $979,239 were made to  the
     Limited  Partners  in  1995  and  1994,  respectively.   The
     Limited Partners' distributions represent $67.82 and  $68.33
     per  Limited Partnership Unit outstanding using  14,196  and
     14,330   weighted   average  Units   in   1995   and   1994,
     respectively.  The distributions represent $67.49 and  $7.20
     per  Unit  of  Net Income and $.33 and $61.13  per  Unit  of
     return   of   contributed  capital   in   1995   and   1994,
     respectively.
     
     As  part  of  the  Limited  Partner distributions  discussed
     above, the Partnership distributed $643,138 and $193,255  of
     proceeds from property sales in 1995 and 1994, respectively.
     The  distributions  reduced the Limited  Partners'  Adjusted
     Capital Contributions.

     Distributions  of  Net  Cash Flow to  the  General  Partners
     during  1995  and  1994  were subordinated  to  the  Limited
     Partners  as  required in the Partnership Agreement.   As  a
     result,  99%  of distributions and income were allocated  to
     Limited Partners and 1% to the General Partners.

     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 and in no
     event,  obligated to purchase Units if such  purchase  would
     impair the capital or operation of the Partnership.
     
                                
          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994


(9) Partners' Capital -  (Continued)

     During 1995, twelve Limited Partners redeemed a total of 118
     Partnership  Units  for  $79,774  in  accordance  with   the
     Partnership Agreement.  The Partnership acquired these Units
     using  proceeds from the Applebee's sale, which reduced  the
     Limited  Partners' Adjusted Capital Contribution.  In  1994,
     seven  Limited Partners redeemed a total of 139  Partnership
     Units  for $103,416 using proceeds from the Applebee's sale.
     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
     $967.07 per original $1,000 invested.

(10) 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:
      
                                                 1995          1994
     
     Net Income For Financial
      Reporting Purposes                      $ 967,752     $ 104,199
     
     Depreciation for Tax Purposes
      Under Depreciation For Financial
      Reporting Purposes                         56,416        84,612
     
     Income Accrued for Tax Purposes Over
      (Under) Income For Financial
      Reporting Purposes                         (4,324)       59,568
     
     Property Expenses For Tax Purposes
      Under (Over) Expenses For Financial
      Reporting Purposes                       (234,439)      565,968
     
     Gain on Sale of Real Estate For Tax
      Purposes Under Gain For Financial
      Reporting Purposes                        (25,031)      (13,866)
                                               ---------     ---------
           Taxable Income to Partners         $ 760,374     $ 800,481
                                               =========     =========
                                

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994

(10) 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:
     
                                                1995           1994
     
     Partners' Capital For
      Financial Reporting Purposes          $ 9,562,698    $ 9,648,080
     
     Depreciation For Tax Purposes
      Under Depreciation For Financial
      Reporting Purposes                         80,206         23,790
     
     Capitalized Start-Up Costs
      Under Section 195                         185,558        185,558
     
     Amortization of Start-Up and
      Organization Costs                       (190,952)      (190,952)
     
     Income Accrued For Tax Purposes Over
      Income For Financial
      Reporting Purposes                        332,908        337,232
     
     Property Expenses For Tax Purposes
      Under Expenses For Financial Reporting
      Purposes                                  377,613        612,052
     
     Gain on Sale of Real Estate For Tax
      Purposes Over Gain For Financial
      Reporting Purposes                         47,570         72,601
     
     Organization and Syndication Costs
      Treated as Reduction of Capital
      For Financial Reporting Purposes        1,987,080      1,987,080
                                             -----------    -----------
           Partners' Capital For
              Tax Reporting Purposes        $12,382,681    $12,675,441
                                             ===========    ===========
                                

          AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
                                
                  NOTES TO FINANCIAL STATEMENTS
                                
                   DECEMBER 31, 1995 and 1994

(11) 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, 1995:
     
                                                     1995
                                            Carrying        Fair
                                             Amount         Value
     
     Cash                                 $1,873,834     $1,873,834
     Note Receivable                          37,500         37,500
     
     The carrying values of cash and the note receivable
     approximate fair values.
     
(12) Contingencies -

     The  Partnership is subject to legal proceedings and  claims
     which arise in the ordinary course of its business.  In  the
     opinion  of management, these matters are adequately covered
     by insurance, or if not so covered, are without merit or are
     of  such  a  nature, or involve such amounts, as  would  not
     materially  affect  the  financial position  or  results  of
     operations of the Partnership.


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 51, 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 March, 1997.  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
Incorporated,  which  is  registered  with  the  Securities   and
Exchange Commission as a securities broker-dealer, is a member of
the  National Association of Securities Dealers, Inc. (NASD)  and
is  a  member  of  the Security Investors Protection  Corporation
(SIPC).   Mr.  Johnson has been president,  a  director  and  the
principal shareholder of AEI Fund Management, Inc., a real estate
management  company founded by him, since 1978.  Mr.  Johnson  is
currently  a general partner or principal of the general  partner
in fifeen other limited partnerships.

        Mark  E.  Larson,  age 43, is Executive  Vice  President,
Treasurer  and  Chief Financial Officer and has been  elected  to
continue  in these positions until March, 1997.  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 March, 1997.  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.

        AFM, the Managing General Partner of the registrant,  and
Robert  P.  Johnson, its Individual General Partner,  contributed
$1,000 in total for their interest in the registrant.  See Item 1
for  a discussion of their share of the registrant's profits  and
losses.   Neither the General Partners nor their affiliates  have
purchased Limited Partnership 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, 1995.

Person or Entity                                        Amount Incurred From
   Receiving                Form and Method        Inception (February 6, 1987)
  Compensation              of Compensation             To December 31, 1995


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

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

General Partners     Reimbursement at Cost for all             $  222,019
and Affiliates       Acquisition Expenses

General Partners     1% of Net Cash Flow in any fiscal year    $   87,188
                     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     Reimbursement at Cost for all             $1,861,080
and 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.

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, 1995

General Partners     15% of distribution of Net Proceeds       $ 13,705
                     of Sale other than distributions
                     necessary to restore Adjusted Capital
                     Contributions and provide a 6% cumulative
                     return to Limited Partners.  The General
                     Partners will receive only 1% of
                     distributions of Net Proceeds of Sale
                     until the Limited Partners have received
                     an amount equal to: (a) their Adjusted
                     Capital Contributions, plus (b) an
                     amount equal to 14% of their Adjusted
                     Capital Contributions per annum, cumulative
                     but not compounded, less (c) all previous cash
                     distributions to the Limited Partners.


        The  limitations  included in the  Partnership  Agreement
require   that  the  cumulative  reimbursements  to  the  General
Partners  and  their affiliates for administrative  expenses  not
allowed under the NASAA Guidelines ("Guidelines") will not exceed
the  sum of (i) the front-end fees allowed by the Guidelines less
the  front-end fees paid, (ii) the cumulative property management
fees  allowed  but  not  paid, (iii) any real  estate  commission
allowed under the Guidelines, and (iv) 10% of Net Cash Flow  less
the  Net Cash Flow actually distributed.  The reimbursements  not
allowed  under  the  Guidelines include  a  controlling  person's
salary  and  fringe  benefits,  rent  and  depreciation.   As  of
December  31, 1995, 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

                        27   Financial Data Schedule
                             for year ended December 31, 1995.

             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 21, 1996                 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 21, 1996
Robert P. Johnson       and Sole Director of Managing General
                        Partner

/s/ Mark E. Larson      Executive Vice President, Treasurer     March 21, 1996
Mark E. Larson           and Chief Financial Officer