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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934

For the quarterly period ended September 30, 2002
--------------------------------------------------------------------------

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from ____________________ to ______________________


Commission file number
0-26218
---------------------------------------


CNL Income Fund XVI, Ltd.
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)


Florida 59-3198891
- ---------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)


450 South Orange Ave.
Orlando, Florida 32801 - 3336
- ---------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)


Registrant's telephone number
(including area code) (407) 540-2000
----------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _________




CONTENTS





Part I Page

Item 1. Financial Statements:

Condensed Balance Sheets 1

Condensed Statements of Income 2

Condensed Statements of Partners' Capital 3

Condensed Statements of Cash Flows 4

Notes to Condensed Financial Statements 5-7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11

Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11

Item 4. Controls and Procedures 11

Part II

Other Information 12-13





CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS




September 30, December 31,
2002 2001
------------------ -------------------

ASSETS

Land and buildings on operating leases, net $ 25,580,015 $ 24,546,795
Net investment in direct financing leases 2,677,271 2,713,964
Real estate held for sale -- 1,544,807
Investment in joint ventures 3,454,953 3,248,973
Cash and cash equivalents 1,390,817 774,673
Receivables, less allowance for doubtful accounts
of $58,582 and $755,431, respectively 11,391 61,512
Accrued rental income, less allowance for doubtful accounts of
$12,753 and $48,919, respectively 1,525,995 1,382,581
Other assets 32,521 32,097
------------------ -------------------

$ 34,672,963 $ 34,305,402
================== ===================

LIABILITIES AND PARTNERS' CAPITAL

Accounts payable $ 6,665 $ 9,022
Real estate taxes payable 27,205 36,398
Distributions payable 900,000 900,000
Due to related parties 27,362 17,331
Rents paid in advance and deposits 59,854 50,039
------------------ -------------------
Total liabilities 1,021,086 1,012,790

Partners' capital 33,651,877 33,292,612
------------------ -------------------

$ 34,672,963 $ 34,305,402
================== ===================

See accompanying notes to condensed financial statements.



CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF OPERATIONS




Quarter Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
-------------- ------------- --------------- ---------------

Revenues:
Rental income from operating leases $ 783,867 $ 620,815 $ 2,799,376 $ 1,919,181
Earned income from direct financing leases 96,924 70,540 247,737 216,074
Interest and other income 4,140 6,025 45,204 48,784
-------------- ------------- --------------- ---------------
884,931 697,380 3,092,317 2,184,039
-------------- ------------- --------------- ---------------

Expenses:
General operating and administrative 61,689 44,762 201,986 281,084
Property expenses 13,116 55,053 33,466 312,101
Management fees to related party 8,028 7,748 31,889 21,908
Other taxes -- -- 19,699 33,194
Depreciation and amortization 129,032 96,861 375,675 380,698
Provision for write-down of assets -- 1,128,352 -- 1,390,713
-------------- ------------- --------------- ---------------
211,865 1,332,776 662,715 2,419,698
-------------- ------------- --------------- ---------------

Income (Loss) Before Gain on Sale of Assets and
Equity in Earnings of Joint Ventures 673,066 (635,396 ) 2,429,602 (235,659 )

Gain on Sale of Assets -- -- -- 281,058

Equity in Earnings of Joint Ventures 81,698 76,368 232,499 173,398
-------------- ------------- --------------- ---------------

Income (Loss) from Continuing Operations 754,764 (559,028 ) 2,662,101 218,797
-------------- ------------- --------------- ---------------

Discontinued Operations (Note 5):
Income (Loss) from discontinued operation, net (889 ) (18,190 ) 21,044 67,367
Gain (Loss) on disposal of discontinued
operations, net (6,251 ) (482,753 ) 376,120 (894,698 )
-------------- ------------- --------------- ---------------
(7,140 ) (500,943 ) 397,164 (827,331 )
-------------- ------------- --------------- ---------------

Net Income (Loss) $ 747,624 $ (1,059,971 ) $ 3,059,265 $ (608,534 )
============== ============= =============== ===============

Net Income (Loss) Per Limited Partner Unit
Continuing Operations $ 0.17 $ (0.12 ) $ 0.59 $ 0.05
Discontinued Operations -- (0.11 ) 0.09 (0.18 )
-------------- ------------- --------------- ---------------

Total $ 0.17 $ (0.23 ) $ 0.68 $ (0.13 )
============== ============= =============== ===============

Weighted Average Number of Limited Partner
Units Outstanding 4,500,000 4,500,000 4,500,000 4,500,000
============== ============= =============== ===============


See accompanying notes to condensed financial statements.


CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL




Nine Months Ended Year Ended
September 30, December 31,
2002 2001
--------------------- -----------------

General partners:
Beginning balance $ 160,017 $ 160,017
Net income -- --
--------------------- -----------------
160,017 160,017
--------------------- -----------------

Limited partners:
Beginning balance 33,132,595 36,592,727
Net income 3,059,265 139,868
Distributions ($0.60 and $0.80 per limited
partner unit, respectively) (2,700,000 ) (3,600,000 )
--------------------- -----------------
33,491,860 33,132,595
--------------------- -----------------

Total partners' capital $ 33,651,877 $ 33,292,612

===================== =================

See accompanying notes to condensed financial statements.


CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS




Nine Months Ended
September 30,
2002 2001
----------------- ----------------

Increase (Decrease) in Cash and Cash Equivalents

Net Cash Provided by Operating Activities $ 3,025,652 $ 2,184,632
----------------- ----------------

Cash Flows from Investing Activities:
Additions to land and buildings on operating leases (1,406,745 ) --
Proceeds from sale of assets 1,918,641 1,145,045
Investment in joint ventures (221,404 ) (1,134,117 )
----------------- ----------------
Net cash provided by investing activities 290,492 10,928
----------------- ----------------

Cash Flows from Financing Activities:
Proceeds from loan from corporate general partner -- 100,000
Repayment of loan from corporate general partner -- (100,000 )
Distributions to limited partners (2,700,000 ) (2,700,000 )
----------------- ----------------
Net cash used in financing activities (2,700,000 ) (2,700,000 )
----------------- ----------------

Net Increase (Decrease) in Cash and Cash Equivalents 616,144 (504,440 )

Cash and Cash Equivalents at Beginning of Period 774,673 1,081,650
----------------- ----------------

Cash and Cash Equivalents at End of Period $ 1,390,817 $ 577,210
================= ================

Supplemental Schedule of Non-Cash Financing
Activities:

Distributions declared and unpaid at end of period $ 900,000 $ 900,000
================= ================


See accompanying notes to condensed financial statements.




CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2002 and 2001


1. Basis of Presentation:

The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary to a fair statement
of the results for the interim periods presented. Operating results for
the quarter and nine months ended September 30, 2002, may not be
indicative of the results that may be expected for the year ending
December 31, 2002. Amounts as of December 31, 2001, included in the
financial statements, have been derived from audited financial
statements as of that date.

These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund XVI, Ltd. (the "Partnership") for the year ended December
31, 2001.

Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets." This statement requires that a
long-lived asset be tested for recoverability whenever events or
changes in circumstances indicate that its carrying amount may not be
recoverable. The carrying amount of a long-lived asset is not
recoverable if it exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset.
The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when
the carrying amount of a long-lived asset exceeds its fair value. If an
impairment is recognized, the adjusted carrying amount of a long-lived
asset is its new cost basis. The statement also requires that the
results of operations of a component of an entity that either has been
disposed of or is classified as held for sale be reported as a
discontinued operation if the disposal activity was initiated
subsequent to the adoption of the Standard.

2. Reclassification:

Certain items in the prior years' financial statements have been
reclassified to conform to 2002 presentation. These reclassifications
had no effect on total partners' capital or net income.

3. Land and Buildings on Operating Leases:

In June 2002, the Partnership reinvested a portion of the net sales
proceeds from the sale of the property in Mesquite, Texas and the
majority of the net sales proceeds from the sale of the property in
Rancho Cordova, California in a property in Austin, Texas at an
approximate cost of $1,406,700. The Partnership acquired this property
from CNL Funding 2001-A, LP, an affiliate of the general partners (see
Note 6).

4. Investment in Joint Ventures:

In June 2002, the Partnership reinvested a portion of the net sales
proceeds from the sale of the property in Mesquite, Texas, in a joint
venture arrangement, Arlington Joint Venture, with CNL Income Fund VII,
Ltd., an affiliate of the general partners. The joint venture acquired
a property in Arlington, Texas from CNL Funding 2001-A, LP, an
affiliate of the general partners (see Note 6). The Partnership and CNL
Income Fund VII, Ltd. entered into an agreement whereby each
co-venturer will share in the profits and losses of the property in
proportion to its applicable percentage interest. As of September 30,
2002, the Partnership had contributed approximately $210,800 for a 21%
interest in this joint venture.




CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2002 and 2001


4. Investment in Joint Ventures - Continued:

As of September 30, 2002, Columbus Joint Venture, TGIF Pittsburgh Joint
Venture, and Arlington Joint Venture, each owned and leased one
property to operators of fast-food or family-style restaurants. In
addition, the Partnership and affiliates, in three separate tenancies
in common, each owned and leased one property to operators of fast-food
or family-style restaurants. The following presents the combined,
condensed financial information for the joint ventures at:



September 30, December 31,
2002 2001
---------------- ----------------

Land and buildings on operating
leases, net $ 7,824,122 $ 6,921,194
Cash 23,556 11,544
Accrued rental income 322,169 246,192
Other assets 25 1,160
Liabilities 23,441 23,698
Partners' Capital 8,146,431 7,156,392


Nine Months Ended
Quarter Ended September 30, September 30,
2002 2001 2002 2001
------------ ---------------- ------------- ---------------

Revenues $ 236,454 $ 207,074 $ 650,362 $ 539,445
Expenses (40,342 ) (37,022 ) (116,935 ) (97,177 )
------------ ---------------- ------------- ---------------
Net Income $ 196,112 $ 170,052 $ 533,427 $ 442,268
============ ================ ============= ===============


The Partnership recognized income of $232,499 and $173,398 during the
nine months ended September 30, 2002 and 2001, respectively, of which
$81,698 and $76,368 were earned during the quarters ended September 30,
2002 and 2001, respectively, from these joint ventures and tenancies in
common.

5. Discontinued Operations:

In March 2002, the Partnership sold its Denny's property in Mesquite,
Texas, to an unrelated third party for $475,000 and received net sales
proceeds of approximately $448,700. Due to the fact that the
Partnership had recorded provisions for write-down of assets in
previous years, including $482,753 during the quarter and nine months
ended September 30, 2001, respectively, no gain or loss on disposal of
discontinued operations was recorded during the nine months ended
September 30, 2002 relating to this sale.

In June 2002, the Partnership sold its Jack in the Box property in
Rancho Cordova, California, to an unrelated third party for
approximately $1,363,400 and received net sales proceeds of
approximately $1,325,100, resulting in a gain on disposal of
discontinued operations of approximately $402,600 during the nine
months ended September 30, 2002.




CNL INCOME FUND XVI, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters and Nine Months Ended September 30, 2002 and 2001


5. Discontinued Operations - Continued:

In June 2002, the Partnership entered into an agreement with an
unrelated third party to sell the Denny's property in Bucyrus, Ohio. In
connection with the anticipated sale of the property, the Partnership
recorded a loss on disposal of assets of $382,366 during the nine
months ended September 30, 2001 and $20,262 during the quarter and six
months ended June 30, 2002. In August 2002, the Partnership sold this
property for $156,200 and received net sales proceeds of approximately
$144,900, resulting in an additional loss of $6,251 during the quarter
and nine months ended September 30, 2002. The financial results for
these three properties are reflected as Discontinued Operations in the
accompanying financial statements.

The operating results of the discontinued operations for the above
properties are as follows:



Quarter Ended September 30, Nine Months Ended September 30,
2002 2001 2002 2001
--------------- -------------- ----------------- ---------------

Rental revenues $ -- $ 29,274 $ 42,364 $ 91,583
Interest and other income -- -- 3,168 35,532
Expenses (889 ) (47,464 ) (24,488 ) (59,748 )
Gain (loss) on disposal of assets (6,251 ) (482,753 ) 376,120 (894,698 )
--------------- -------------- ----------------- ---------------
Income (loss) from discontinued
operations $ (7,140 ) $ (500,943 ) $ 397,164 $ (827,331 )
=============== ============== ================= ===============


6. Related Party Transactions:

In June 2002, the Partnership acquired a property, in Austin, Texas,
from CNL Funding 2001-A, LP, for a purchase price of approximately
$1,406,700 (see Note 3). In addition, in June 2002, the Partnership
invested in Arlington Joint Venture with CNL Income Fund VII, Ltd.
Arlington Joint Venture acquired a property in Arlington, Texas, from
CNL Funding 2001-A, LP, for a purchase price of approximately
$1,003,600 (see Note 4). CNL Funding 2001-A, LP is an affiliate of the
general partners. CNL Funding 2001-A, LP had purchased and temporarily
held title to the properties in order to facilitate the acquisition of
the properties by the Partnership. The purchase price paid by the
Partnership and the joint venture represented the costs incurred by CNL
Funding 2001-A, LP to acquire the properties.

During 2001, Phoenix Restaurant Group, Inc. ("PRG") filed for
bankruptcy and rejected two of the four leases it had with the
Partnership. In May and June 2002, the bankruptcy court assigned the
two leases not rejected by PRG relating to the properties Branson,
Missouri and Temple, Texas to CherryDen, LLC and Seana, LLC,
respectively. CherryDen, LLC is an affiliate of the general partners.
All other lease terms remained the same. In connection with these
leases, the Partnership recognized rental revenues of approximately
$196,500 and $74,500 relating to the properties in Branson, Missouri
and Temple, Texas, respectively, during the nine months ended September
30, 2002 of which approximately $74,100 and $17,500 were earned during
the quarter ended September 30, 2002, respectively.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

CNL Income Fund XVI, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on September 2, 1993, to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants were to
be constructed (the "Properties"), which are leased primarily to operators of
national and regional fast-food and family-style restaurant chains. The leases
are generally triple-net leases, with the lessee responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of September 30, 2001,
the Partnership owned 38 Properties directly and five Properties indirectly
through joint venture or tenancy in common arrangements. As of September 30,
2002, the Partnership owned 35 Properties, directly and six Properties
indirectly through joint venture or tenancy in common arrangements.

Capital Resources

Cash from operating activities (which includes cash received from
tenants, distributions from joint ventures, and interest and other income
received, less cash paid for expenses) was $3,025,652 and $2,184,632 for the
nine months ended September 30, 2002 and 2001, respectively. The increase in
cash from operating activities during the nine months ended September 30, 2002,
as compared to the nine months ended September 30, 2001, was a result of changes
in the Partnership's working capital and changes in income and expenses, as
described in "Results of Operations."

Other sources and uses of capital included the following during the
nine months ended September 30, 2002.

In March 2002, the Partnership sold its Property in Mesquite, Texas, to
an unrelated third party for $475,000 and received net sales proceeds of
approximately $448,700. Due to the fact that the Partnership had recorded
provisions for write-down of assets in previous years, no gain or loss was
recorded during the nine months ended September 30, 2002 relating to this sale.

In June 2002, the Partnership sold the Jack in the Box Property in
Rancho Cordova, California, to an unrelated third party for approximately
$1,363,400 and received net sales proceeds of approximately $1,325,100,
resulting in a gain on disposal of discontinued operations of approximately
$402,600 during the nine months ended September 30, 2002.

In June 2002, the Partnership reinvested a portion of the net sales
proceeds from the sale of the property in Mesquite, Texas and the majority of
the net sales proceeds from the sale of the property in Rancho Cordova,
California in a Property in Austin, Texas at an approximate cost of $1,406,700.

In June 2002, the Partnership reinvested approximately $210,800 of the
remaining proceeds from the sale of the Property in Mesquite, Texas, in a joint
venture arrangement, Arlington Joint Venture, with CNL Income Fund VII, Ltd., a
Florida limited partnership and an affiliate of the general partners. The joint
venture acquired a Property in Arlington, Texas at an approximate cost of
$1,003,600.

The Partnership and the joint venture acquired the Properties from CNL
Funding 2001-A, LP, a Delaware limited partnership and an affiliate of the
general partners. CNL Funding 2001-A, LP had purchased and temporarily held
title to the Properties in order to facilitate the acquisition of the Properties
by the Partnership. The purchase prices paid by the Partnership and the joint
venture represented the costs incurred by CNL Funding 2001-A, LP to acquire the
Properties. The general partners believe that this transaction, or a portion
thereof, relating to the sale of the Property in Rancho Cordova, California and
the reinvestment of the net sales proceeds, described above, will qualify as a
like-kind transaction for federal income tax purposes. The Partnership
anticipates its distributions will be sufficient to enable the limited partners
to pay federal and state income taxes, if any (at a level reasonably assumed by
the general partners), resulting from these transactions.

In June 2002, the Partnership entered into an agreement with an
unrelated third party to sell the Denny's Property in Bucyrus, Ohio. In
connection with the anticipated sale of the Property, the Partnership recorded a
loss on disposal of assets of $20,262 during the quarter and six months ended
June 30, 2002. In August 2002, the Partnership sold this Property for $156,200
and received net sales proceeds of approximately $144,900, resulting in an
additional loss of $6,251 during the quarter and nine months ended September 30,
2002. The Partnership anticipates it will reinvest these proceeds in an
additional Property. The Partnership anticipates its distributions will be
sufficient to enable the limited partners to pay federal and state income taxes,
if any (at a level reasonably assumed by the general partners), resulting from
this transaction.

Currently, rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties are invested in money market accounts
or other short-term, highly liquid investments, such as demand deposit accounts
at commercial banks, money market accounts and certificates of deposit with less
than a 90-day maturity date, pending the Partnership's use of such funds to
invest in an additional Property, pay Partnership expenses, or to make
distributions to the partners. At September 30, 2002, the Partnership had
$1,390,817 invested in such short-term investments, as compared to $774,673 at
December 31, 2001. Cash and cash equivalents increased during the nine months
ended September 30, 2002, primarily as a result of collections of accounts
receivable from December 31, 2001 and the receipt of sales proceeds from the
sale of the Property in Bucyrus, Ohio, as described above. The funds remaining
at September 30, 2002, will be used to invest in an additional Property and to
pay distributions and other liabilities.

Short-Term Liquidity

The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will generate net cash flow in
excess of operating expenses.

The Partnership's short-term liquidity requirements consist primarily
of the operating expenses of the Partnership.

The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.

Total liabilities of the Partnership, including distributions payable,
were $1,021,086 at September 30, 2002, as compared to $1,012,790 at December 31,
2001. The general partners believe that the Partnership has sufficient cash on
hand to meet its current working capital needs.

The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership. Based on current
and, for the nine months ended September 30, 2001, a loan from the corporate
general partner, the Partnership declared distributions to limited partners of
$2,700,000 for each of the nine months ended September 30, 2002 and 2001
($900,000 for each of the quarters ended September 30, 2002 and 2001). This
represents distributions of $0.60 per unit for each of the nine months ended
September 30, 2002 and 2001, ($0.20 for each applicable quarter). No
distributions were made to the general partners for the quarters and nine months
ended September 30, 2002 and 2001. No amounts distributed to the limited
partners for the nine months ended September 30, 2002 and 2001 are required to
be or have been treated by the Partnership as a return of capital for purposes
of calculating the limited partners' return on their adjusted capital
contributions. The Partnership intends to continue to make distributions of cash
available for distribution to the limited partners on a quarterly basis.

Long-Term Liquidity

The Partnership has no long-term debt or other long-term liquidity
requirements.

Results of Operations

Total rental revenues were $3,047,113 for the nine months ended
September 30, 2002, as compared to $2,135,255 for the same period of 2001, of
which $880,791 and $691,355 were earned during the third quarter of 2002 and
2001, respectively. Rental revenues were lower during the quarter and nine
months ended September 30, 2001 as compared to the same periods of 2002, due to
the fact that in March 2001, the Partnership stopped recording rental revenues
relating to four Denny's Properties because the tenant, Phoenix Restaurant
Group, Inc. ("PRG") was experiencing financial difficulties and ceased rental
payments. In October 2001, PRG filed for bankruptcy and rejected two of the four
leases it had with the Partnership. During the nine months ended September 30,
2002, the Partnership received payment of past due rents relating to the two
Properties not rejected by PRG and recorded the rental revenues. During 2002,
the bankruptcy court assigned these two leases to new tenants, all other lease
terms remained the same. ne of the new tenants is an affiliate of the general
partners. In March 2002, the Partnership sold one of the vacant Properties, as
described above in "Capital Resources." The Partnership still has one vacant
Property and will not recognize any rental revenues from it until the Property
is re-leased or the Property is sold and the proceeds are reinvested in an
additional Property. The lost revenues resulting from the remaining vacant
Property will have an adverse effect on the results of operation of the
Partnership if the Partnership is not able to re-lease or sell the Property in a
timely manner. The general partners are currently seeking a replacement tenant
for the vacant Property.

The tenant of the Las Vegas, Nevada Property vacated the Property and
ceased restaurant operations during the first quarter of 2001. The Partnership
sold this Property in December 2001 and used the proceeds to acquire two
additional Properties. The increase in rental revenues during the quarter and
nine months ended September 30, 2002, as compared to the same periods of 2001,
was partially due to the acquisition of these two Properties, one in December
2001 and one in June 2002.

During the nine months ended September 30, 2002 and 2001, the
Partnership earned net income from joint ventures of $232,499 and $173,398,
respectively, of which $81,698 and $76,368 were earned during the quarters ended
September 30, 2002 and 2001, respectively. The increase in net income earned by
joint ventures during the quarter and nine months ended September 30, 2002, as
compared to the same periods of 2001, was primarily due to the fact that in June
2001, the Partnership reinvested the net sales proceeds it received from the
2001 sale of the Property in Marana, Arizona in a Property in Walker, Louisiana,
with an affiliate of the general partners, as tenants-in-common. In addition, in
June 2002, the Partnership reinvested a portion of the net sales proceeds from
the sale of the Property in Marana, Arizona in a joint venture arrangement,
Arlington Joint Venture, as described above in "Capital Resources".

Operating expenses, including depreciation and amortization expense and
provision for write-down of assets were $662,715 and $2,419,698, for the nine
months ended September 30, 2002 and 2001, respectively, of which $211,865 and
$1,332,776 were incurred during the quarters ended September 30, 2002 and 2001,
respectively. Operating expenses were higher during the quarter and nine months
ended September 30, 2001, as compared to the same periods of 2002, due to the
fact that during the quarter and nine months ended September 30, 2001, the
Partnership recorded provisions for write-down of assets of $1,128,352 and
$1,390,713, respectively, relating to the Properties leased by PRG and the
vacant Property in Las Vegas, Nevada. The provisions represented the difference
between each Property's carrying value and its fair value. As of September 30,
2002, the Partnership had one remaining vacant Property. The Partnership is
seeking a replacement tenant for the Property.

In addition, the decrease in operating expenses during the quarter and
nine months ended September 30, 2002, was partially due to the fact that during
2002 and 2001, the Partnership incurred Property related expenses, such as legal
fees, repairs and maintenance, insurance and real estate taxes relating to
vacant Properties. Between November 2001 and September 2002, the Partnership
sold four of its vacant Properties. The Partnership did not incur any additional
expenses relating to these Properties after the sale of the Properties had
occurred.

The decrease in operating expenses during the nine months ended
September 30, 2002, was also due to a decrease in the costs incurred for
administrative expenses for servicing the Partnership and its Properties and a
decrease in the amount of state tax expense relating to several states in which
the Partnership conducts business. The decrease in operating expenses during the
quarter ended September 30, 2002, as compared to the same quarter of 2001, was
partially offset by an increase in depreciation expense due to the fact that in
December 2001 and June 2002 the Partnership acquired two additional Properties.

Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." This statement requires that a long-lived asset
be tested for recoverability whenever events or changes in circumstances
indicate that its carrying amount may not be recoverable. The carrying amount of
a long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset. The assessment is based on the carrying amount of the asset at the date
it is tested for recoverability. An impairment loss is recognized when the
carrying amount of a long-lived asset exceeds its fair value. If an impairment
is recognized, the adjusted carrying amount of a long-lived asset is its new
cost basis. The statement also requires that the results of operations of a
component of an entity that either has been disposed of or is classified as held
for sale be reported as a discontinued operation if the disposal activity was
initiated subsequent to the adoption of the Standard.

During the nine months ended September 30, 2002, the Partnership
identified and sold three Properties that met the criteria of this standard and
were classified as Discontinued Operations in the accompanying financial
statements. Two of the Properties were vacant and the proceeds from all three
sales were reinvested in income producing Properties.

As a result of the 2001 sale of the Property in Marana, Arizona, the
Partnership recognized a gain of $281,058, during the nine months ended
September 30, 2001.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 4. CONTROLS AND PROCEDURES

The general partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in the
Partnership's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. The principal executive
and financial officers of the corporate general partner have evaluated the
Partnership's disclosure controls and procedures within 90 days prior to the
filing of this Quarterly Report on Form 10-Q and have determined that such
disclosure controls and procedures are effective.

Subsequent to the above evaluation, there were no significant changes
in internal controls or other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.


PART II. OTHER INFORMATION


Item 1. Legal Proceedings. Inapplicable.

Item 2. Changes in Securities. Inapplicable.

Item 3. Default upon Senior Securities. Inapplicable.

Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.

Item 5. Other Information. Inapplicable.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

3.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11
and incorporated herein by reference.)

4.1 Affidavit and Certificate of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11
and incorporated herein by reference.)

4.2 Amended and Restated Agreement of Limited Partnership
of CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2
to Form 10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated herein
by reference.)

10.1 Management Agreement between CNL Income Fund XVI, Ltd.
and CNL Investment Company (Included as Exhibit 10.1
to Form 10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated herein
by reference.)

10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
Exhibit 10.2 to Form 10-K filed with the Securities
and Exchange Commission on March 30, 1995, and
incorporated herein by reference.)

10.3 Assignment of Management Agreement from CNL Income
Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)

10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 13, 2001, and
incorporated herein by reference).

10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Included
as Exhibit 10.5 to Form 10-Q filed with the Securities
and Exchange Commission on August 13, 2002, and
incorporated herein by reference.)

99.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)

99.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter
ended September 30, 2002.



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

DATED this 4th day of November, 2002.


CNL INCOME FUND XVI, LTD.

By:CNL REALTY CORPORATION
General Partner


By:/s/ James M. Seneff, Jr.
---------------------------
JAMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)


By:/s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)





CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund XVI, Ltd. (the
"registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the
registrant;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: November 4, 2002


/s/ James M. Seneff, Jr.
- --------------------------
James M. Seneff, Jr.
Chief Executive Officer




CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER

PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Bourne, President and Treasurer of CNL Realty Corporation,
the corporate general partner of CNL Income Fund XVI, Ltd. (the "registrant")
certify that:

1. I have reviewed this quarterly report on Form 10-Q of the
registrant;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):

a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Date: November 4, 2002


/s/ Robert A. Bourne
- -----------------------------
Robert A. Bourne
President and Treasurer


EXHIBIT INDEX


Exhibit Number

(c) Exhibits

3.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)

4.1 Affidavit and Certificate of Limited Partnership of CNL
Income Fund XVI, Ltd. (Included as Exhibit 3.2 to
Registration Statement No. 33-69968-01 on Form S-11 and
incorporated herein by reference.)

4.2 Amended and Restated Agreement of Limited Partnership of
CNL Income Fund XVI, Ltd. (Included as Exhibit 4.2 to
Form 10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated herein by
reference.)

10.1 Management Agreement between CNL Income Fund XVI, Ltd.
and CNL Investment Company (Included as Exhibit 10.1 to
Form 10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated herein by
reference.)

10.2 Assignment of Management Agreement from CNL Investment
Company to CNL Income Fund Advisors, Inc. (Included as
Exhibit 10.2 to Form 10-K filed with the Securities and
Exchange Commission on March 30, 1995, and incorporated
herein by reference.)

10.3 Assignment of Management Agreement from CNL Income Fund
Advisors, Inc. to CNL Fund Advisors, Inc. (Included as
Exhibit 10.3 to Form 10-K filed with the Securities and
Exchange Commission on April 1, 1996, and incorporated
herein by reference.)

10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities and
Exchange Commission on August 13, 2001, and incorporated
herein by reference).

10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Included as
Exhibit 10.5 to Form 10-Q filed with the Securities and
Exchange Commission on August 13, 2002, and incorporated
herein by reference.)

99.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)

99.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)



EXHIBIT 99.1







EXHIBIT 99.2